What a capitalist system will do is push the price up high enough that we never run out, making sure that there's always some oil production available for the boutique plastics industry and other specialty niches.

Already, and more so as prices go higher, there's money in finding substitutes, which will work great for the non-energy uses for oil.  But when it comes to oil's role as a source of cheap energy, I don't think capitalism is going to help.  Capitalism will work fine for finding other sources of expensive energy which will be somewhat cheaper than the really expensive oil of the future, but hardly what I call "fixing" the problem.

The problem is, in an absolutely perfect capitalist society (read, not us), the problem actually would be fixed.  But, I think perfect capitalism requires perfect understanding of the market situations, which we just don't have.  

You have a lot more faith in capitalism than I do. The fact is that there is a lack of social consciousness in capitalism. The disparity between the have's and havenot's is just one example of what's wrong with capitalism.

We COULD correct PO, if we took the right steps.  But, ultimately, the people who hold the pursestrings have to know that there's a problem that needs a solution NOW.  Ultimately, this is where the process has failed.

The problem is that all of the solutions I know of require asking people to make great sacrifices. My contention is that people will fight change at all costs. How many times have we heard that honesty with the American public would be political suicide? Jimmy Carter was honest and look where that got him. So the politicians who are aware of the situation aren't going to make the same mistake. There are just too many other immediate problems to deal with. So they will continue to pass the buck until the buck can't be passed. We may be seeing some initial signs of that now.

Anyhow, my basic point is that "correcting PO" equates to causing social upheaval. If the situation gets bad enough, change will be forced on us. It may not be a very pretty scenario. Sometimes the universe has to give us a little spanking to set us on the right course. Historically speaking progress comes in cycles not unlike economic cycles. Even if things were to get pretty nasty, we will end up being stronger, smarter, and better prepared for future challenges.