I was talking to a friend last night, just came back from a vacation in Vietnam (Saigon area) visiting someone. She said her friend's driver told my friend that their car ran on oil, because of the scarcity of gasoline in Vietnam. She claims it's regular motor oil. I told my friend that's unlikely, perhaps it's a vegetable oil of some kind. She also said vegetables were scarce, she was having a tough time finding them from vendors there. Hmmmn.
As mentioned previously, this is exactly what happened during the oil shocks of the 1970s - shortfalls in supply as little as 5% drove the price of oil up near 400%. Demand did not fall until the world was mired in the most severe economic slowdown since the Great Depression.Utter crap: 1970s offer no demonstration of "classical economic" theory, as the price of both gasoline and crude were stupidly constrained by U.S. government price controls and import quotas (which in turn impacted worldwide prices). The 1973 and 1979 "shocks" followed lesser worldwide shortages than came in the '56 Suez Crisis '67 Arab/Israeli war. But only '73 and '79/80 brought lines and only in the U.S.: a direct result of U.S. price controls.
While many analysts claim the market will take care of this for us, they forget that neoclassic economic theory is besieged by several fundamental flaws that will prevent the market from appropriately reacting to Peak Oil until it is too late. To illustrate, as of April 2005, a barrel of oil costs about $55. The amount of energy contained in that barrel of oil would cost between $100-$250* dollars to derive from alternative sources of energy. Thus, the market won't signal energy companies to begin aggressively pursuing alternative sources of energy until oil reaches the $100-$250 mark.
That the "amount of energy contained in that barrel of oil would cost between $100-$250* dollars to derive from alternative sources of energy" merely justifies the current reliance on petroleum. But that's ridiculous, as $70/ barrel justifies shale extraction, ethynol, etc. What's keeping it away is that no one is willing to invest in those alternatives because they don't believe that current prices of crude will be sustained.
So, the need and possibility for bio-diesel and other alternatives depends entirely upon the continuing high price of crude. It won't.