I wrote a rather lengthy comment over at the former Calpundit's Washington Monthly, and thought it was worth copying over to here (slightly edited):
Robear wrote: I believe that when we look back at how petroleum was used the 20th and early 21st century the greatest shame will be that we burned most of it, considering the other uses that hydrocarbons could have been put to: plastics, medicines, fertilizers and the like.
After wading through more than half the posts [in that thread], I was starting to think I'd have to bring this point up here, but I'm glad to see I'm not the only one here thinking of it. Nonetheless, indulge me while I expand on this slightly:
Doing my own extrapolation of curves (hyperbolic functions and such, in keeping with my blog name), I'm much more concerned about what happens when we start running out of oil, than what happens when it isn't cheap anymore. I'm guessing 2040-2070ish for this (ob grain of salt warning here). Remember that oil is used for more than just private transportation fuel and electrical generation. Aircraft fuel, shipping fuel, lubrication of just about everything, and the plastics, medicines, and fertilizers Robear mentioned. A hypothetical alternative fuel source might do for shipping, but many of them would be useless for the speedy jet aircraft travel we've become accustomed to. Hybrid technology and other increases of efficiency are even more useless; a ship doesn't do much stopping and starting during a transoceanic voyage, and I dare you to bring a jet to a complete stop in flight.
It's even worse for the other products, for which petroleum is a raw material rather than 'just' an energy source. There are many other possible/conceivable sources of energy which are relatively easily interchangeable, but synthesizing these from scratch would be terribly cost-prohibitive.
If we do find an alternative energy source, or improve efficiency of petroleum-burning remarkably, we might be in the odd case of finding the costs of these petroleum-as-raw-material good rising, because if there are less and less oil wells and refineries running, economies of scales will be lost, and these goods will have to bear most of the cost of extraction of each barrel of oil, instead of being indirectly 'subsidized' by the money gained from the part of the crude useful for gasoline and fuel oil. I'd guess we'd feel the impact of this most in the prices of lubricants, plastics (which are in just about everything these days, of course), and perhaps fertilizer (I'm rather unknowledgeable about its use in fertilizers). Even if we're running all electrical motors or something like that (leaving the source of the electricity as an exercise for the reader), those motors still need to be lubricated by something, and the wires have to be insulated, and what will you make the tires out of? These cost increases would impact almost every segment of the economy, in much the way that fuel price increases do now.
And, also much like what Robear said, I fear that sometime after that point, our grandkids will be cursing us for having burned up all that wonderful raw material into the atmosphere, when it could have been turned into durable goods or used sparingly for lubrication, when all we really needed was the energy from it, which (I hope from their point of view) is so freely available from so many other sources.
The real irony would be if we burned up the last few drops of cheap, easy oil for energy before we managed to find some other source of energy. After all, research into new energy sources takes energy itself, and usually plastics and lubricants too. If we got to that point and hadn't found a seriously long-term solution by then (fusion, or 50%-plus efficient solar, or something similarly SFish), that's when we'd really be screwed, society would collapse (assuming it'd survived the peak), and it would be time for those grandkids to seriously curse us.