You're right about the denial. I work in an economics faculty at a good university in Tokyo. I asked a colleague what he thought about peak oil and other oil-related stuff, and he said he found it boring.
On the other hand, now that PM Koizumi has basically picked the even crazier nationalists Abe and Aso to fight over succeeding him next year, maybe some extreme tension with China and elsewhere will make oil less boring for him and many others.
Many people here still figure pissing off the Chinese is basically cost-free, because a lot of Japanese don't grasp what's at stake and how weak their position is. In the stand-off over oil deposits in NE Asia, I should think China has the better hand in the game. The US is unlikely to step in if an Abe or Aso regime provokes a determined and unilateral move by the Chinese. The issues concerning international maritime boundaries over here are too murky to sell bodybags to the US public and the Iraq debacle is likely to make people want to stay out of stuff the isolationists (in the US) could blame on the Abe-Aso-Koizumi approach. In a real stand-off, the Japanese would almost fold first, as most people wisely would not have the stomach to risk this going to a fight. Rich countries only go to war if they're sure they can wipe the floor with the enemy. So the nationalists here dream they're holding a royal flush when in fact their so-called buddies the Bushies have merely plopped their hand in a pot of lukewarm water. Waking up is so hard to do...