I'm still catching up on some of last week's news so just came across this post from Free Exchange [edited to correct attribution, thanks Doug]. What struck me was the continuing revisions down in the graph (I'll confess to not caring all that much about the actual implications to offshore drilling. There's some interesting regulatory stuff there but I'm convinced that every drop of oil on earth will ultimately be burned so don't see a lot of point worrying about that aspect). We're finally beginning to run up against the reality of limited oil reserves and the evidence is turning towards the situation being worse than we thought not better.
The problem is that our policy response to this has been disappointing, at best. Having been fascinated by the alternate technologies for a long time, such as hydrogen, electric, biofuels, etc., the continuing lack of more than marginal use (such as hybrids) of large scale applications of these technologies makes me increasingly sceptical that they represent real alternatives to oil. While technically we can use other technologies for the same functions, they can't match the primary quality of oil that has led to its critical importance, low cost.
What we're going to have to accept is that transportation is going to get far more expensive and that the solution will be different infrastructure not technology. We're going to need oil for many, many decades yet, especially in rural areas. I believe the only way we can continue to keep oil cheap enough for it to fulfill its necessary function is if we can build infrastructure with existing technologies that will allow those that don't need cars to not own them. Specifically, I think we need a policy response based on a shift away from auto transport in urban areas. If we wait for the supply shortfall to hit us before making large scale changes, the cost increase will hit a lot of people pretty hard with no real alternate choices. If we act in advance, we can get a lot of the people using cars now that don't have to out of them, allowing those that do need them to have them for a few decades longer.