There are two viewpoints, in Jung's opinion, of how things happen: the mechanistic/causal (also known as "cause & effect"), and the energic/final (also known as "means & ends"). Either of these viewpoints may be used to explain an event, depending on the bias of the observer.

The causal view is based on the concept of substances interacting, but not altering, and that A causes B: your car runs into my car, resulting in a dent. The energic view is based on the concept that energy in a system interacts and transforms in certain directions, based on a gradient (path of least resistance), and that the goal of energy is to reach a point of equilibrium/balance in the system; so if the point of balance is B, it could get there by means of A, but depending on the relative energy interactions in the system, it might get there via C, or D, or some other path. A concrete example not involving physics is a bit difficult: let's say money = energy; you need money to buy a car - you could get it by asking your parents, asking your boss for a raise, or asking a bank for a loan; which way is easiest depends on your situation vis a vis those sources of "energy".

Jung postulates that the energic view represents how the psyche works (and labels Freud's view as flawed because it is too causal), and that one can measure the amount of energy in its parts, at least relatively for an individual, by noting the subjective value s/he places on various thoughts, feelings, behaviors. But this only works for things of which s/he is conscious.

He postulates that it is possible to objectively measure the energy in someone's unconscious by collecting data on how much is constellated by his/her complexes, the frequency and intensity of reactions indicating a disturbance or complex, and the intensity of accompanying effects.

To apply concepts already recognized for physical energy, Jung postulates the existence of a similar psychic energy, which is a specific part of life-energy, which he calls libido (by which he means a much wider concept than Freud's use of the term). This then allows him to show that psychic energy obeys the laws of physical energy:

The "Law of Conservation of Energy" says energy can be neither created or destroyed, just changed from one state to another. Jung focuses on an element of this, the "Principle of Equivalence", which says if you expend or consume energy to cause something, an equal amount of the same or another form of energy will appear elsewhere. He says this is what happens when a conscious value, like a transference, decreases: you will either see an equivalent value spring up, or need to look for signs of unconscious activity.

The "Principle of Entropy" says that over time in a closed system (i.e. one in which energy cannot leak in or out) the differences in intensity of various forms of energy even out, so eventually there is no further change (e.g., a pendulum gradually coming to rest). Jung applies this to the action of the tension of the opposites eventually equalizing each other and resulting in a new stable attitude.

That is Jung's groundwork leading up to "III. Fundamental Concepts of The Libido Theory". If you can feel comfortable with it up to this point, I think the rest will make more sense.