Firsty, Peak Oil is not about running out of oil and by itself doesn't say much about the price.

Its about a peak in supply per day/week/year. The basic idea goes like this: The oil thats found first is also the stuff that easiest to get out of the ground, the stuff thats found later is harder to get and (this is the important part) we can't get it out as fast. Therefore at some point, the amount of oil coming out of the ground per day will reach a maximum and decrease from then on (perhaps after a few ups and downs but generally fixed supply for a while).

When you add in the idea that the harder to extract oil is going to cost more to get out and that we 'need' oil at whatever price you get the idea that prices will increase.

The term used to describe this need is 'inelastic'. If demand is inelastic, it doesn't change much when the price changes. In the eyes of the average consumer they may be doing a lot to try and not use the car as much but how much is that marginal use as a percentage of the oil they indirectly use by importing goods and services?

We have built world-wide transportation infrastructures on using oil to get around (not to mention all the petro-chemical plastics etc.). So, unless we have teleportation ready to be rolled out on an industrial scale, worldwide usage of oil is quite inelastic because the individual choices we make about our car usage are very small in comparision to this.

For demand to decrease to a point where it has a significant impact on the price of oil when the supply of oil is either fixed or decreasing (i.e. past peak) you are talking about changing the infrastructure of the world!

This is not something that is done overnight. If its done in a controlled way it will take time (and prices will keep on rising in the meantime). If its uncontrolled, you have the poorer countries outbid for oil and potentially their entire economy collapsing as their infrastructure grinds to a halt.

All this of course assumes that:
1. Supply is fixed/decreasing. i.e. Peak Oil is here or already past.
2. Demand is inelastic. i.e. our individual changes in oil consumption decisions are too little and/or too late.

I'm of the opinion that 1 is true but I don't want to believe that 2 is. Looking at the world of today I see no reason to argue against it, I just don't like the potential future that implies if we bury our heads in the sand.

Either way, I'm trying to do my bit to change my individual habits and educate myself. I'd advise others to do the same.

I recently met a retired former chief engineer of a large global oil exploration company - his view Peak Oil was "about now". He said the world has enough natural gas - but it is not retooling the car factories and fuel infrastructure fast enough. Also that petoleum is necessary for aviation fuel and some other uses and should be conserved. Not burnt in SUV's going to buy a pizza.

And guess who sold LNC at $1.40... me