Oil can only get so expensive. We have lots of alternative sources of energy that put a lid on the oil price. Just to give some examples, at some point, making artificial oil out of coal will become viable on a large scale (just like Germany did during WWII), and there's always nuclear power.
And there's also lots of oil at sea that we have barely started to explore.
They're not interchangeable with oil at all. Even if we did have those plants, we'd still need to replace half the current infrastructure.
And more boringly, energy conservation and increased efficiency can have the same effect as new sources. A `smart grid' becomes a more and more lucrative investment as energy prices go up.
1. How can oil "only" get so expensive? By oil, we are referring to the act of gathering existing oil. There is no limit to the cost of gathering. Going deeper and deeper, or from lower concentration will become more expensive as time goes on.
2. We have a lot of alternative sources of energy that put a lid on oil price. Can you explain the mechanism for this? Are you referring to the true cost of oil, or just at the fillup station? Are you saying the major cost of gathering oil is the input energy, and because the input energy is alternative, the EROIE is infinite? Please elaborate.
3. making artificial oil out of coal will become viable on a large scale. Making artificial oil has nothing to do with gathering oil. The reason they did that was that oil was a more valuable energy medium than coal, because it can be used for many products, not just trains/ships/electricity.
4. There's always nuclear power. I am a big fan of nuclear power, but have no faith in governments making a sound scientific analysis. So unless nuclear power becomes cheap (infrastructure-wise), I think peak oil is still a big concern.
5. Lot's of oil at sea we haven't explored. There's a reason we haven't explored it - it costs way, way, too much. But I'm sure we will as the EROIE goes down.
So, if oil ever gets expensive enough, nobody will use it until we have used up eg more coal. While we use the coal and _not_ the oil, oil won't become scarcer, and thus won't increase in price.
Of course, it doesn't really make sense to go for oil that has less energy output than what its extraction costs. At any price. [0] Technologic progress will take care of some of that.
[0] Unless you use the oil as a kind of battery. Ie use 100J of solar power that's only available during the day, to extract 50J of oil usable anytime---that might be worthwhile, but it would compete with battery technology not with energy sources.