As Yoda said, that is why you fail.
You keep conflating “oil” with “energy”. Every time. You don’t seem to understand that peak oil means only that OIL production will decline. OIL. It says OIL right there in peak oil, so I don’t understand why it should be so difficult. Coal is not oil. Nuclear is not oil. Hydro is not oil.
We aren’t facing any sort of shortage of coal. We aren’t facing any sort of shortage of uranium. We aren’t facing a shortage of hydro, although we’re pretty much maxed out on hydro.
Oil is not used to produce electricity. Say it with me. Oil is not used to produce electricity.
What do we use oil for? To power cars, busses, trucks, trains, and aircraft. Why do we use oil? Because diesel and gasoline and jet fuel are cheaper than any other alternatives. Why is oil so cheap? Because there’s so much of it. What happens when there’s not so much of it? Why, it’ll get more expensive. And if demand is inelastic, then it could get more expensive very quickly. And in the short term, we find that demand is pretty inelastic, which means price shocks.
However, in the long term we find that demand IS elastic.
$20/gallon is a good thought exercise. What happens when gas prices start increasing to such levels? Do people just pay? Or do they search for alternatives?
Thing is, we use gasoline very inefficiently, in terms of people-miles/gallon. Single drivers drive their SUVs 60 miles a day back and forth to work every day. That uses up lots of gas. But people don’t think of efficiency in terms of people-miles/gallon, they think of it in terms of people-dollars/mile. They don’t care how much gas they burn to get to work, or to get to the store, they care about how much it COSTS (costs in terms of dollars, time, hassle, etc, sometimes even externalities).
If you commute 60 miles a day in a 15mpg vehicle, you burn a certain amount of gas. But it’s possible to reduce that amount by lot. What if you moved closer to your work? If you lived 30 miles away, that’s a 50% savings. If you worked from home one day a week, that’s a 20% savings. If you carpool with a co-worker every day, that’s a 50% savings. If you bought a 30mpg vehicle, that’s a 50% savings. Add up all those savings, and you’re using 10% of the gas you used to use. So if you can afford to commute to work in the wasteful scenario when gas is $3/gallon, you could commute to work in the efficient scenario for the same cost, even if gas is $30/gallon.
And the thing is, when gas is $20/gallon (or $10/gallon), electric vehicles are much cheaper to operate than gas vehicles. And if everyone switches to electric vehicles, what does that do to demand for gas? And when demand for gas goes down, what does that do to the price of gas?