There is going to be an economic crunch (to put it mildly) if we attempt to maintain business as usual much longer. There will also doubtless be economic and social pain if we attempt to mitigate peak oil before the fact.

But there is no getting around major economic dislocation in the near-to-intermediate future.

The issue is: do we attempt to manage the transition proactively, or do we just party on the deck of the Titanic while the captain orders steady-as-she-goes, full-speed-ahead?

Capitalism thrives on change, churning and new frontiers of all sorts anyway, so a big redirection to conservation shouldn't be threatening to the current elites. A conservation program would provide ample new business oportunities and growth while energy is still relatively cheap. The history of the US War Production Board in WWII shows us that even stringent measures such as rationing, do not send the economy, or public opinion, into a nose dive. (Wikipedia has a good entry on the War Production Board).

It seems perfectly reasonable to massage public opinion with a marketing campaign; conservation should be a much easier sell than the war in Irag, Afghanistan (and Iran?). The public's opinion has been successfully manipulated for decades to be hostile to its own self interest. With a propoganda machine that powerful, it should be easy to mobilize public support for measures to conserve resources of all sorts, and relocalize the economy.

An augmented social safety net will be established so the public won't be staring into an abyss; that's why the Great Depression left us with the New Deal, instead of a Socialist revolution. And, for better or worse, even the current elites get to maintain their power and priviledge, at least for longer than with present trends.