This "peak oil" crisis is not explained in "Economics 101". While it is a supply and demand issue, the dependance on oil for our "civilization" is way more pervasive than "what we pay at the pump." Almost all of our consumer goods, including the computer I'm writing this on, rely on incredible amounts of oil to produce. Improved gas milage in our cars, even if we doubled MPG, would only reduce overall consumption by 2-4%. It is the useage by heavy industry, and distribution of all goods worldwide that consume the vast amount of our energy. Plus, "proven reserves" is an oxymoron, and the figures have been wildly overstated, perhaps by as much as one-third in Saudi, and the Caspian Sea.
2005 will go down as the "tipping point", when accelerating demand worldwide outstrips production capabilities. Prices will be over $75/bar. by April 2006, at the current trend, and over $100/bar.at the start of 2007. There will be unforseeable changes in our society by 2010, when oil will be well over $200/bar., and the "Energy Wars", of which the invasion of Iraq was the first shot, will be global.
There can still be "oil in the ground for the next 500 years", but that's only because the ability to get at it and transport it will be curtailed radically, due to either: the end of the macro-industrialized world as we know it, and/or other energy sources will have taken over. You don't need to go much beyond a 10-15% shortfall of oil production vs. demand without a substitute (nuclear? coal?) to cause total ecconomic chaos, and even with a 5-10% shortfall, which would be a best-case senario, our world is about to change in ways unthinkable today.
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