Burn, Baby, Burn

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."