Hubbert's peak
Read - The imminent peak of global oil production by Colin Campbell (2000)
Read - Oil haves and have-nots by Rodger Doyle, Scientific American 9/04
At wikipedia, Energy fringe science
Geophysicist M. King Hubbert developed a model to predict oil production rates. He successfully predicted that US oil production would max out in about 1970. Remember what happened! So, when will world oil production max out? Current estimates are 2004-2008! Alarming isn't it! (See projections of global oil production)
But isn't there still oil to be found?
Of course! But it's rate of production that concerns us not the total amount of oil. Since only about 6% of Earth's oil remains to be discovered, discovery is not a solution to oil shortages.
Why aren't people alarmed?
We predict the future by extrapolating from the immediate past.
Why should I worry? oil production is still increasing
The oil crisis will strike when demand exceeds production, before the oil production maximum. Presently demand is increasing faster than production capacity.
How will the economy cope with this?
Prices will obviously rise. This will encourage exploitation of "secondary" fuel resources.
How much will prices rise?
When demand exceeds supply, prices rise. The price increase depends on desirability of the product and the nature of alternative products. We have here an extremely desirable product with, in the short term, few alternatives.
Shouldn't we start developing alternative energy sources?
We should have done this ten years ago. It's too late now to prevent serious shortages in the near future.
Won't some cheaper energy source be available soon?
There's nothing anywhere near as cheap as fossil fuel which has high energy content and can be simply pumped from the ground. Capitalism assumes that, with high incentives, cheap alternatives will always appear. New alternatives are general but, unfortunately, not universal. Wind, one of the best alternatives, is free, but it's a low density source and harvesting it has capital and maintenance costs.
Why won't capitalism solve the problem?
Capitalism will ultimately solve energy problems. However capitalism feeds on growth and short term extrapolation. It's not designed to handle long term considerations or true limits.
How do we know there's actually a limit involved?
Medieval society operated in roughly a steady state with limits imposed by disease (for example). Science allows us to bypass limits and expand exponentially. Since we've overcome all limits so far we assume that we'll do so in the future. It's like a bacterial culture that exhausts a carbon source. Bacteria adapt by switching to another carbon source. But, since mass is conserved, carbon sources can't be switched indefinitely.
How bad will things get?
Experiences in the early '70s provide clues. Some however believe things will be much worse. For example, promoters of "Olduvai theory" predict permanent blackouts in major American cities by 2020 and ultimate collapse of civilization.
How can I minimize problems?
Personally live as if energy cost 3 or 4 times what it does now. As a society we should consider future oriented policies such as taxing energy inefficiency and subsidizing efficiency. This is obviously not capitalism, but we need to recognize capitalism's limits. Read Hubbert's Peak,the Impending World Oil Shortage (by Kenneth S. Deffeyes) as well as book reviews and energy related articles in general.
Why didn't the predicted crisis happen?
Hydraulic fracturing permits recovery of previously unavailable petroleum. This has temporarily destabilized the petroleum market. Eventually the market will settle down and sometime in the future shortages will reappear. The unsettling side of hydraulic fracturing is that, to many, petroleum resources no longer seem limited. It also insures that carbon dioxide will continue to rise in the atmosphere and may ultimately pose as much of a problem as limited hydrocarbon resources.