A newly-published book by Paul Roberts, The End of Oil, and a variety of observers remind us again that we either have seen or will soon see a peaking out of the production of the world's oil. Worse yet, we are encountering or will soon encounter a decline in the production of so-called "cheap oil," the most easily accessible of the world's carbon energy resources. These events are concurrent with new demands for oil, especially by the rapidly-expanding economies of Asia. All of this helps account for the new reality that instead of encountering recently a mere price "spike" in oil, we may be entering an era in which we have to adjust our thinking to prices that fluctuate around, say, $40 per barrel, a level long thought to be unsustainable even by OPEC, the oil-supplying cartel.
Of course, warnings about the world's heavy reliance on a resource controlled by a few relatively unstable nations have been sounded for years. In the U.S., they became especially acute at the time of the first oil crises in the 1970s. One response was a study, Energy Future, published in 1979 by the Energy Project at the Harvard Business School, headed by Robert Stobaugh and Daniel Yergin. Starting from a premise stated in the title of the first chapter, "The End of Easy Oil," the project team went on to recognize the importance of a balanced approach relying heavily on the marketplace. But it suggested that this could be complemented by two major efforts to deal with the dilemma, at least in the U.S.—incentives to foster conservation and the development of alternative energy sources, particularly solar energy.
Roberts observes that it isn't in anyone's immediate interest to conserve cheap oil. It helps bestow competitive advantage on firms and countries and a convenient, inexpensive, and relatively clean source of carbon energy on the world's consumers. As a result, there is a race to consume it as fast as possible, a race interrupted only by such things as increasingly ineffective attempts to control supply by OPEC, sporadic disruptive efforts by individual governments and their leaders, and wars.
If predictions of the end of cheap oil are not accurate to the barrel or a certain date, they must be directionally right. This assumption raises questions about how the world will best adjust to an age of more expensive energy and how long it will have to do so. Of the possible alternatives for approaching the challenge, three seem to stand out. One relies on market forces to provide the incentives for changes in behaviors. Another would supplement that with government-created incentives of the kind suggested by Stobaugh and Yergin, today possibly including support for the further development of the hydrogen fuel cell or other technologies. Yet a third might include some attempt on the part of the world's major energy-using countries to create incentives for the efficient use of energy on a multi-national basis, an approach similar to the Kyoto Accord intended to reduce the world's pollution—pollution resulting largely from the use of carbon fuels.
Given the trends in demand and supply, no action constitutes action. But is that the best alternative? Is this a matter in which the U.S., as the world's most prolific user of energy, should take the lead? Or does it make any sense for any one nation to risk placing itself at a competitive disadvantage by doing so? What do you think? 
To learn more:
Paul Roberts, The End of Oil: On the Edge of a Perilous New World (Boston: Houghton Mifflin, 2004).
Robert Stobaugh and Daniel Yergin, Eds., Energy Future: Report of the Energy Project at the Harvard Business School (New York: Random House, 1979).