I'm in the midst of a job change (a blog entry on this later...) so I haven't been as attentive to this blog or Sepia Mutiny as I'd like.   I did want to point out a pair of articles about the Oil bogeyman that are well worth your time.

First, my friend RL forwarded me this link to a fantastic economic piece about the cost of oil, the cost of oil alternatives and so on.   One of the things that turns people off about economic literature is its preference for abstraction and really weird aggregate measures.   It's theoretically precise, perhaps but far from a real mass medium.  By contrast, speak like a business man and your message rings clear and true -

...The market price of oil is indeed hovering up around $50 a barrel on the spot market. But getting oil to the surface currently costs under $5 a barrel in Saudi Arabia, with the global average cost certainly under $15. And with technology already well in hand, the cost of sucking oil out of the planet we occupy simply will not rise above roughly $30 a barrel for the next 100 years at least.

...The cost of oil comes down to the cost of finding, and then lifting or extracting. First, you have to decide where to dig. Exploration costs currently run under $3 per barrel in much of the Mideast, and below $7 for oil hidden deep under the ocean. But these costs have been falling, not rising, because imaging technology that lets geologists peer through miles of water and rock improves faster than supplies recede.

...To pick just one example among many, finding costs are essentially zero for the 3.5 trillion barrels of oil that soak the clay in the Orinoco basin in Venezuela, and the Athabasca tar sands in Alberta, Canada. Yes, that's trillion--over a century's worth of global supply, at the current 30-billion-barrel-a-year rate of consumption.

Then you have to get the oil out of the sand--or the sand out of the oil. In the Mideast, current lifting costs run $1 to $2.50 per barrel at the very most; lifting costs in Iraq probably run closer to 50 cents, though OPEC strains not to publicize any such embarrassingly low numbers. For the most expensive offshore platforms in the North Sea, lifting costs (capital investment plus operating costs) currently run comfortably south of $15 per barrel.

And so on... you get the picture.   Oil is a dirt cheap form of energy.   Anything else will cost far more.   Why can't more folks explain themselves this way?  

Second, Arnold Kling takes this lead and discusses the current somewhat vogue idea that by shelling out an extra $3K for a Prius rather than an Echo, you're helping bring down the Saudi monarchy (and occasionally, one would presume, demonstrating to Bush et. al. that there's a "third way") -

What upsets [some] neocons and others is that with oil prices high, Saudi Arabia and other oil producers earn a large windfall. We seem to have considerable xenophobia concerning the Saudis. For example, Andrew Sullivan recently featured a letter from a reader which said, "It angers me that the political, economic and military security of my country depends in large part on the continued goodwill of a bunch of fanatical men wearing dresses who dream about the 7th Century." Apparently, hatred of the Saudis is so intense that America's most prominent gay conservative approves of attacking them as "men wearing dresses."

...The effect of even a 10 percent reduction in world oil demand on the number of barrels of Saudi oil consumed would likely be minimal, because Saudi oil is the cheapest oil and hence the least likely to be rendered uneconomic to produce.

...The point to keep in mind is that any oil conservation program will do two things. First, it will reduce our ratio of oil consumption to Gross Domestic Product (GDP, the total value of goods and services produced each year). Second, oil conservation will reduce GDP. The reason it will reduce GDP is that we will have to substitute other factors of production, including labor, capital, and more costly forms of energy, in order to conserve on oil.

...Even if it only were to reduce our GDP by 5 percent, that would be $500 billion. If your goal is to change the foreign policy of Saudi Arabia, my guess is that there are ways of doing so that would cost less than $500 billion.

The reality is that energy conservation is a feeble tool for foreign policy. Significant conservation could be very costly to our own country. It might have only a small effect on Saudi oil revenue. It is not at all clear that a drop in Saudi oil revenue would bring about favorable changes in their policies toward terrorism.

Well said.