As with any resource, if prices are not interfered with, and allowed to reflect the scarcity and difficulty of obtaining a resource, civilization will adjust. It wasn't that long ago that everyone was using whale oil to light their homes. Whales got hard to come by, and other ideas came up.

There are already good signs. The price of gasoline is high enough that people are inspired to find vehicles that don't use as much of it, but they trade that off against other needs, like something big enough for three kids and their junk. Hybrids have gone in record time from an experimental technology to production items, which shows that the market was ready for it. Not for electrics, not yet. The private sector in action--I suspect a government program to produce a working hybrid would still be testing prototypes ten years from now.

I see a good chunk of the cars being hybrid in a few years. Even without hybrids, the internal combustion engine has improved. It is interesting that even a large SUV today gets about the same mileage as a VW Beetle got back when I was in college. And it's certainly a lot cleaner.

We need to do more work on nuclear power, and I was disappointed that the energy bill seemed to touch only on existing light-water reactor designs. Nuclear power badly needs some new technology.

Oil has more value as a raw material for other products than it does as a fuel, and at some point it will be too expensive to just burn.

While I don't think Iraq was about oil, I agree that there are many reasons that make it geopolitically important in the Middle East, and many people have said that this importance was a primary reason for changing the regime.