One of my colleagues made bets with a physics professor and an ethnic studies professor here on campus a little while back. The physics guy and the ES guy argued that by 2011 (I believe that's the right year), world use of oil would require pumping oil at capacity. The demand would outstrip supply, causing world-wide economic collapse. Each bet was $1,000.
The physics and ES professor's arguments, unfortunately for them, included no reference to the role of oil prices in reigning in world oil use and world oil explanation. In other words, they implicitly assumed away one of the most simple rationing "tools" in the world oil market... the price of oil. That's right, people do not respond to higher oil prices. Consumers do not use less oil. Entrepreneurs do not search for new sources of oil nor do they search for oil alternatives. They are more or less inanimate objects in the market for oil.
I see that oil prices have dipped close to $100 a barrel. My colleague says that if he wins the bet, he'll have his opponents treat us to a nice dinner. I'd say chances are pretty good that we'll be eating well in a couple of years.
But I wonder why does the panicky peak-oil crowd ignore the simple functioning of markets?
Addendum: I just ran across this from Michael Giberson at Knowledge Problem on the dynamics of prices in the current gasoline market. He explains why gasoline prices, this time around, have gone up like a feather and have more or less come down like a rocket.