The American Government Accountability Office, essentially their equivalent of Sheila Fraser, releases a report on the prospects of peak oil. It’s an 82-page PDF, but let me summarize it for you:
We’re going to run out of oil. We don’t know when, but it’s going to hurt. There is no plan. There isn’t even a plan for finding out when it’s going to happen, let alone a plan for making a plan for what we ought to do. That is all.
Its appendices, however, are full of fascinating facts. On hunting for oil reserves under deep ocean floors:
Overall, the projected marginal costs of deepwater drilling range from 3.0 to 4.5 times the cost of shallow water drilling.
The current cost of producing ethanol from corn is between $0.90 to $1.25 per gallon, depending on the plant size, transportation cost for the corn, and the type of fuel used to provide steam and other energy needs for the plant.
The 2005 production of ethanol in the United States was approximately 4 billion gallons. By 2014-15, corn ethanol production is expected to peak at approximately 9 billion to 18 billion gallons annually.
The current wholesale cost of pure biodiesel (B100) ranges from about $2.90 to $3.20 per gallon, although recent sales have been reported at $2.75 per gallon.
On turning coal into liquid fuel (don’t wait up):
Experts project that, at most, 80,000 barrels per day could be produced by 2015 and 1.7 million barrels per day by 2030.
On hydrogen fuel-cell vehicles (ditto):
A fuel cell stack currently costs about $35,000, and a hydrogen fuel cell vehicle about $100,000.
The GAO report isn’t alarmist, exactly, just very matter-of-fact. It’s true that (unless one of the unusual theories about oil’s not coming from dead organic matter under pressure over millions of years is unexpectedly correct) we’ll eventually run out, and prices will start to rise alarmingly long before that happens. But it won’t happen all at once. There will be adaptation time. Along the way, other technologies will start to look mighty appealing.
That said, the economies best able to adapt will be those where individuals have put in the effort to insulate themselves as much as possible, both literally and figuratively. Price shocks in a commodity you don’t use much of, won’t affect you very much.