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Even though I am not an economist, I don't think your premise is very sound. First of all, not all the predictions of oil "running out" have been spurious. One of the most important reasons (much as the Shrub may deny it) we are currently digesting Iraq is to expand the American presence in the Mideast, which became much more important after American oil production peaked around 1970, just as predicted by Dr. Hubbert.
I also think the notion that we will experienced a soft and prolonged landing as price and supply gradually shift position, softened even more by all those environmentally friendly substitute energy sources, is wishful thinking. The truth not only are we not seriously developing alternatives (a rather substantial task considering that our civilization's dependence on hydrocarbons is not limited to energy. Howz about all those plastic garbage and sandwich bags, for example) but we seem to be accelerating the rate at which we are sucking the stuff up and out the exhaust pipe.
Back in 1973 or 1974 when the price of oil suddenly shot up, there was immediate chaos and panic. It goes to illustrate the fact that the U.S. was no longer energy independent. There was still plenty of the black stuff. But, suddenly a bunch of tent dwelling nomads with unpronounceable names were calling the shots (although now fortunately the good old U.S. of A. is about to sell off their political units like so many Mickey Dee franchises).
Rather than a nice cushioned ride to a soft landing on an irrigated suburban lawn, my image is more like one of those car chases on "COPS" where the guy is doing 80 off-road after the cops have shot out all four tires.
We won't have to "run out." Political instability in a crucial spot and/or a sudden price hike, will probably bring on all four horse people from the Acropolis. There will be pestilence, war, brown lawns and a pandemic of leaky garbage bags.
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Anyone who knows me knows that I don't take doomsday predictions too seriously. So I must admit I'm not worried about horsemen, or men riding any other animals for that matter.
It is possible that a sudden spike in the spot price could occur and would cause a return to a 1973 or 1974 style scenario. I think this is unlikely for a couple reasons. Firstly, the government has learned a lot from that situation and would not likely make the same mistakes they did last time, such as rationing. They'd be more likely to let the market do it's job. Secondly, I can't see oil producing countries trying to cause shortages again. Sure we're dependent on their oil, but they're equally dependent on the revenues that oil generates. However a very sudden rise in the spot price would be due to political factors or instability in oil producing countries and not due to the oil simply "running out" as is the case in many doomsday scenarios.
Thanks for your letter,
Mike
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