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Just remember that the cure for low prices is low prices. I’ve seen figures that worldwide demand has only dropped by about 5% (From something like 87 million barrels a day to about 83 or 84). Also, I’ve seen discussions of peak oil framed not in terms of “we’re running out” but in terms of we’re close to the limits of the RATE at which oil can be produced with the fields and infrastructure that exist worldwide. If that’s so, dramatically higher prices will accompany any increase in demand.

It will take a while, but I think that you are right. All investment in oil exploration/development (both here in North America and overseas has come to a halt. Sooner or later that will lead to tight oil supplies and higher oil prices.

All investment in oil exploration/development (both here in North America and overseas has come to a halt.

The industry has slowed down but certainly not come to a halt.

ExxonMobil to Invest at Record Levels to Meet Future Energy Demand
http://www.businesswire.com/portal/site/exxonmobil/index.jsp?ndmViewId=news_view&ndmConfigId=1001106&newsId=20090305005601&newsLang=en

Exxon Mobil Corporation (NYSE:XOM) today announced plans to invest at record levels — between $25 billion and $30 billion annually over the next five years — to meet expected long-term growth in world energy demand.

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March 2009 strategy update: building new heartlands, managing recession challenges
http://www.shell.com/home/content/media/news_and_library/press_releases/2009/2009_strategy_update_17032009.html

As part of its annual review of strategy, Shell said it is continuing with plans to build new upstream and downstream capacity, while managing the near-term challenges of the global economic slowdown.