Even the most hard core neo-classical economists recognize that when the free market produces negative externalities the government is the only resource available to correct the problem. The most obvious negative externality from crude oil consumption is pollution, but another is homeland insecurity. I don't think the government should try to promote alternative energy sources because prices go sky high; as you said the free market would take care of that. I do think the government should try to wean us off fossil fuels to help clean up the environment and to achieve energy self-suffuciency.