DOES CRUDE OIL ABOVE $50

have you scared? The conventional wisdom is that prices like these are recession-makers, but so far it hasn't been true. Motorists just keep pumping the gas and buying up a storm at

Wal-Mart Stores

But what's really scary is the nightmare vision of oil trading at even higher prices. There's no shortage of doomsday peddlers out there talking about $100 oil. But remember, when the Nasdaq was at 5,000 almost exactly five years ago, there were plenty of people who said it was headed to 10,000.

Today's oil bulls have their stories. Accelerating demand from China and India. Dwindling reserves. Geopolitical instability. Terrorism.

OK, it all sounds credible at least on the surface. But then the Nasdaq 10,000 people had their stories, too. Remember how, by now, you were supposed to be able to watch high-definition movies-on-demand on your BlackBerry at the same time as you downloaded the entire Library of Congress onto a single chip? Yeah, right.

The oil catastrophists ought to chill out, lest they make the same kind of mistake the Nasdaq bulls made five years ago. One thing that might help is an amazing new book: "The Bottomless Well," by Peter W. Huber and Mark P. Mills.

The thrust of the book is that we're not running out of oil, and that we never will. Or, to put it more precisely, even if we do, there is an inexhaustible supply of energy to replace it. After all, it's energy we really want, not oil.

According to Huber and Mills, today the world consumes about 345 quadrillion British thermal units (or "quads") of fossil fuel per year from sources such as oil, coal and natural gas. It's a gargantuan amount of energy, and the demand is only rising, here in the industrialized world and in the developing world as well. So how could we not be running out?

Easy. There are 200,000 quads of known coal deposits (almost 600 times the energy we use every year now). There are 10 million quads of oil shale (almost 29 thousand times the energy we use now).

And there's a lot more good old fashioned oil out there, too, that isn't counted in today's reserve reports because it isn't economically viable to extract it. But what is too expensive to extract today can become downright cheap as technology evolves. Huber and Mills point out, "Oil extracted today from beneath 2 miles of water and 4 miles of vertical rock, with 6 miles of horizontal drilling beyond that, costs...about the same as one-mile oil cost in 1980."

The secret of an infinite energy supply is that you can use energy to get even more energy. Consider the development of James Watts' coal-powered steam engine the machine that triggered the industrial revolution that started in England and swept the world. Why was it developed? To pump water out of British coal mines, so that more coal could be extracted.

Do you see the principle? Burn a little coal to run your steam engine, and you get a lot of coal.

The same thing applies to dealing with the environmental effects of our use of energy. Worried that coal is a "dirty" fuel? Just spend some of the energy released by burning the first load of coal to scrub the pollutants out of the second load of coal, and so on. As scrubbing technology improves, coal becomes a "clean" fuel at a great price and with an essentially infinite supply.

But what if we do actually run out of oil? How will we drive our SUVs?

Easy electricity. Huber and Mills believe that within 20 years electricity will be the dominant fuel for transportation and oil is barely used at all in the generation of electricity. It's all coal, natural gas and nuclear.

Speaking of nuclear, Huber and Mills are definitely nuke bulls. They point out that even though the U.S. hasn't built a new plant since the Three Mile Island meltdown in the 1970s, we nevertheless are getting an increasing portion of our electricity from nukes. That's because the plants have proven so safe and efficient that we're running them at greater and greater capacity.

But while we try to squeeze more energy out of our existing nukes, the rest of the world is embracing this clean, inexpensive and literally inexhaustible source of energy. China, for example, has ordered the establishment of 35 new nuclear power plants. Maybe we shouldn't be worried that China will outbid us for oil. We ought to be worried that they will develop cheaper energy sources than we have and it's hard enough to compete with them as it is!

The lesson of Huber and Mills is that it's foolish to worry too much about energy, and especially foolish to conserve it. We should spend it indeed waste it! because the more energy we use, the more we produce.

And don't think that you can conserve energy by being more "efficient." Huber and Mills point out that whenever we get more energy efficient, that very efficiency just makes us use even more energy. Paradoxical? Not at all. Efficiency means lower price. Lower price means more demand. So any efficiency-based attempt at conservation will just backfire.

So don't be afraid. Don't conserve. Burn, baby, burn! The more energy you use, the more you'll have.

There now doesn't seeing oil above $50 a barrel practically make you bullish?

Donald Luskin is chief investment officer of Trend Macrolytics, an economics consulting firm serving institutional investors. You may contact him at don@trendmacro.com.