Another major flaw in logic in the article IMHO.

In 1965, world oil production was 12 billion barrels. It may peak soon at 30 billion. Estimates project that in 2040, production will have slipped to 12 billion barrels--back to 1965 levels. To descend to that point would require a drop in consumption of 2.2% per year for 35 years. Can we do this? I think so. From 1973 to 1975, and again from 1979 to 1983, consumption fell by roughly this much per year. When prices fell, consumption rose again. For a glimpse of the future, note that when gasoline prices briefly spiked 30% due to Hurricane Katrina, US usage dropped 6% over two weeks. Saving 2.2% each year is well within reach.

The math is not this simple.  There were a lot less people in the world in 1965 than today.  We have already made large gains in efficiency.  To decrease oil usage at the same time as maintaining or increasing population is going to require a lot more savings than 2.2% per year because most of that usage is not distributed equally among the worlds population.  This is assuming a fixed rate decline on the backside of peak, which I question as well.  

Try running a world of 6.5-9 Billion people on 12 billion barrels per year, the same as many fewer Billion people in 1965 and see how successful you are.  Something has to give quickly, either population declines or we get super efficient very quickly.  

The problem with banking on efficiency is that you get most of your gains early in the process.  Doubling the fuel economy of a 50mpg car doesn't save you near as much gas as doubling a 25 mpg car.  Same increase in efficiency big difference in consumption gain.

Just observe any other addict.  They will spiral down and down and die to get their very last death bringing fix.  I have seen it happen.  I know people that are now dead because they could not change an addictive behavior.  Be it drugs legal and illegal,  We are addicted to OIL just witness that fact and cringe that we will not stop till we are dead.

The facts speak for themselves

1.  1965 vs. 2006.  In 1965, there were approx. 3.3 billion people on the planent.  Today, there are approx. 6.6 billion, i.e. double the population.
In 1965, a much smaller percentage of the planets food and energy crops were genetic varieties requiring lavish dosages of synthetic fertilizer, fungicides, insecticides and herbicides, and generous (and energy intensive due to pumping) amounts of irrigation.  Norman Borlaug's "green revolution" essentially    transformed world agriculture creating vulnerable, but high yielding varieties that could never survive on their own in the wild.  More primitive plant breeding techniques pre-Borlaug  had given us lower yielding varieties, but at least these varieties weren't so weak, so drought intolerant, and so dependent on petro-derived chemical protection.  In 2006, we can look back at the last 30+ years and see how we have simply delayed the day of reckoning to stabilize world population - instead we were lulled to sleep by leveraging agriculture with a diminishing resource - fossil fuel.  As oil & gas get more scarce, there will most certainly be a frantic return to less chemical dependent means of crop production.  The question is, with such a high percentage of the world dependent on the status quo (Archer Daniels Midland, etc) and upon imports of food aid: will there be chaos?  widespread starvation in places like Egypt?  It would seem to be highly likely.  We really don't know how many people the planet can support using permaculture, or more hollistic methods of food production. But, the last time we tried (pre-1965), the population was less than half of today's, and even then, there was considerable hardship in the developing world.

2.  Diminishing Returns of Technology for Efficiency.  Regarding the potential for conservation via technology, Hemenway is at best naive.  Sure, as energy gets expensive, lots more people may drive less, or carpool.  But don't be delusional about constantly doubling fuel efficiency.
The best examples we have for efficient cars are from Honda & Toyota - Honda's Insight gives at best 70 mpg, but only carries two people and little else.  This is a 3 cyl. engine with a big battery.  If you just want a 3 cyl engine you can dredge up the old Geo Metro from the early 90s - it got 54 mpg tops.  The old Civic VX got 50 mpg, and the smallest Toyota Yaris maybe 52 mpg.  Anyway,  Honda's & Toyota's engineers have been working on the efficiency thing for decades, and we are likely to only see tiny increments of improvement going forward.  The most likely scenario is that people will be replacing their cars with 1 cylinder motorbikes to carry two persons plus a bit of stuff.  With these you could eke out 100 mpg.   But before we retreat to these more minimalist modes of transportation, what will become of the hundreds of millions of existing gas guzzlers?  Will they be magically recycled, just in time?  
In terms of home heating, we may see people retreating into smaller portions of their homes in the winter, and draining the plumbing from parts they can't afford to heat.  Also, they could thicken the walls with scraps from other construction, but again, where are the huge leaps in efficiency going to come from?

3.  There are legitimate weaknesses in the scenarios laid out by the more "catastrophist" wing of the peak oil milieu, but Hemenway misses them.  On Savinar's site, for example, he mentions what the world or US population is likely to be (based on a UN estimate) by the year 2020 and juxtaposes this with how small oil reserves are likely to be at this time.  What Savinar fails to grasp is that once oil prices pass a certain threshold, say, $100 per barrel, maybe higher, the growth in world population is likely to stop in its tracks, and begin reversing.  Many countries in Africa, and parts of Asia are going to suffer unprecedented levels of austerity once the industrial agricultural complex begins to falter, and first world nations can no longer give food aid or even sell much food for export.  When this happens, people who might be considering having children simply won't be able to.  Their own survival, and where to find their next meal will their only thought.