T. Boone Pickens would disagree. In his book The First Billion is the Hardest, he asserts that we've already reached peak oil. His reasoning was that reserves held by oil companies are being depleted faster than new reserves are being discovered. While he isn't exactly disinterested given his investments in natural gas and wind energy, he does offer a unique perspective as a former oilman. Perhaps this is why he stressed the foreign policy benefits of domestically produced energy, rather than the economic ones.
However, the article does show the economic reality of dwindling oil supplies. As easy sources dry up, higher cost reserves become economically feasible. The higher the cost is driven, the more attractive alternative energy sources should become. An all electric car should be an easy sell as long as the range is adequate (~80 miles), and the cost isn't exorbitant (< $40k). They should cost an order of magnitude less ($0.10/gallon equivalent) than fossil fuel powered vehicles to operate and require less maintenance.
> As easy sources dry up, higher cost reserves become economically feasible.
True, but those reserves are higher cost for a reason: they're harder to extract and have a lower production rate. Frankly, it doesn't matter how much oil there is if you can't bring it to market fast enough to meet demand.
Yes it does, because if you can't bring it to market fast enough to meet demand, prices will spike reducing demand. When the prices spike, oil companies are willing to spend more resources to extract oil as quickly as possible in order to sell off their reserves at the highest possible price. This inevitably leads to significantly more supply than demand, and falling prices. At which point capacity is taken offline to prevent oversupply, and the cycle repeats.
If prices are high enough, the market will find a way to extract their reserves fast enough. There could be temporary short falls, but they'll be just that. Should the price remain high, it will give new entrants an opportunity to compete.
Micro-Econ Nit: Increasing prices do not impact demand, rather they have an impact on quantity demanded. Availability of more affordable substitutes such as electronic cars will effect demand.
The argument that quantity supplied of petroleum will continue to rise fails to take into account that at a certain price point, substitute sources of energy make more economic sense.
It's not quite so simple. Higher cost reserves are higher cost because they're harder to extract with current technology. But exploiting such reserves would naturally cause a significant amount of investment in such technology, which would then reduce the extraction cost. The lifetime average extraction cost of what we may call a "higher cost reserve" today may be no higher than other "lower cost" reserves.
The state of the art in the industry is far beyond what it was a few decades, or even years, ago, and that trend will likely continue into the future. Given the total quantity of oil, gas, coal, shale, tar sands, methane clathrate, and kerogen out there, it's not at all unlikely that man-kind may be able to produce fossil fuels for hundreds or thousands of years to come, if there continues to be demand.
However, the article does show the economic reality of dwindling oil supplies. As easy sources dry up, higher cost reserves become economically feasible. The higher the cost is driven, the more attractive alternative energy sources should become. An all electric car should be an easy sell as long as the range is adequate (~80 miles), and the cost isn't exorbitant (< $40k). They should cost an order of magnitude less ($0.10/gallon equivalent) than fossil fuel powered vehicles to operate and require less maintenance.