Yes Country Gal, we will use some mix of both biodiesel and ethanol after oil becomes too expensive to extract from the ground. They'll still be plenty left down there, but too difficult for a number of reasons to extract, leading to the cost problems. However alternative fuels will never be enough to maintain our current wasteful lifestyles. I'm particularly talking about people expecting the "God given" right to drive a car.
We've created a society in the Western World whereby both women and men of a household work. Both need a car to get there, especially if one or both are shift workers. Then along comes Johnny and Jane, the children of the household who "damned well demand" the right to obtain a licence and a car. Neither biodiesel or ethanol will fill the gap of cheap oil. The sums simply don't add up.
On top of this, growing enough crops for biodiesel or ethanol must not be allowed to take up valuable arable land. We'll need it for food crops. I'd be pretty peeved if I was starving whilst some rich moron was driving around in a car running on ethanol derived from corn just because he could. In the United States, ethanol production is already having a dramatic effect on the price of grain.
But, I too believe in innovation and strongly believe that if we recognise the problem the end of cheap oil represents and move NOW to head off a disaster, we can learn to live happily enough in a World of greatly diminished energy supply. Our present wasteful lifestyles must end,either by our own design or by nature's. I know which path I'd rather take.

"Mercury, it still costs to access it.

Yes we might run out of oil, but think about how we came to work out how to use oil in the first place (for those that did watch Crude). We ran out of sperm whales. We are an innovatice race. When oil runs out (or gets uneconomic) we will be forced to do something else, and we will find it. Eg Biodisel and ethanol. And as far as fuel goes, that at least is carbon neutral (eg grow and capture carbon from the air, then burn it and put it back)."

Production costs for oil are miniscule in comparison to renewables like biofuels which at best provide only a marginal return on energy invested. Not to mention all the environmental impacts that biofuel production makes during its lifecycle. Besides there are no “alternatives” in energy. No new energy source we've ever come across has ever completely replaced its predecessor(s). Only added to the mix of energy types in use. For instance when coal supplanted the burning of biomass was the latter replaced? No, the burning of wood is still an important source of energy for a significant part of the world's population. And when oil replaced coal, did we just stop using it? No.

Giant wind farms and solar panel arrays being installed now are not actually retiring existing fossil fuels, just supplementing them. Why? Because exponential economic and population growth means we altogether need to use more energy in order to support us. However industrial society was built on, and relies completely on non-renewable fossil fuels, with oil the master resources. It is widely believed that all these fuels will be commercially worked out within 50 years, because our reliance on them is actually increasing as was pointed out in the documentary, now that the Indians and Chinese are climbing onto the modern consumption bandwagon. Why is it increasing? Because of the incredible amount of cheap energy that is released from burning them.

aime is right
If you took all the food you bought for a week, put it through your food processer, then put it in your fuel tank, how would it compare to the amount of fuel you buy? I think you would find that you bought a greater volume of fuel than food.
That is not taking into account that the volume of food if processed for bio-diesel or ethanol would only make a fraction of the fuel you bought.
Considering that domestic use of oil accounts for well under 50% of all oil used, you can see by this simple example that alternative fuel will never a be a substitute except for a small percentage.
We could never grow enough and feed ourselves unless we halved the population, and that is a distinct possibility.
Oh and by the way aime I just get a bit stirred up when I get called a liar for quoting something I read in a reputable daily newspaper.

Mercury said.... "Production costs for oil are miniscule in comparison to renewables like biofuels which at best provide only a marginal return on energy invested."
Yes Mercury, you've hit the nail squarely on the head. It's usually written as EROEI which means 'Energy Returned On Energy Invested' and exactly just why the "Hydrogen Economy" will never fulfill the dreams of it's exponents. At present it takes more energy to create, store and transport liquid hydrogen than the energy derived from it.
The best chance mankind has, is to invest in greater use of electricity. ie: The extension of electric train infrastructure and more use of small electric commuter vehicles strictly for those who cannot use an alternative method of commuting.
The trouble is, that we need to invest strongly in R&D in this country BEFORE oil becomes ridiculously expensive, but our present Government blunders along with bandaged eyes. I seriously doubt a change to Labor will be any better. Governments won't do a thing that might upset their precious "economy." CSIRO in conjunction with Origin Energy developed wafer thin solar cells and wanted Government assistance to develop them to the commercial stage, but Howard wouldn't hear of it. Now, it looks as though we'll have to buy them from overseas at a higher margin. So much for clever Australia.
Big oil runs not only our Government, it runs the World. The quicker it bites the dust, the better for humanity.
Just getting back to Envireconmic's original post re: statistics, there are no reliable statistics on World oil decline rates. Nobody producing oil wants you to know. Why? While the myth of perpetual oil holds out, big oil companies are lining their greedy pockets with obscene amounts of money and passing no small amount on to willing Governments. Those same Governments will never burst the oil myth for fear of reprisals from the voters or worst, total civil disobedience. People like Matt Simmons have gone a long way towards some semblance of statistical data, but much of it is still guesswork.
Envireconmic, I hope you got something out of your post.

Hey! No problems Alanpoi :-)
As I've found out since I got seriously interested in the theory of "peak oil", it's a very emotive area. I've largely given up on trying to educate people about the possible dangers of heading into a future of ever decreasing oil supply. You should see some of the looks I get at work. I've been met with any level of skepticism right through to outright hostility......and this from fellow nurses who you'd think would be a little more excepting. I guess nobody want to face the fact that the lifestyle they love so much might one day in the near future be ripped away from them.
I've downsized my lifestyle considerably in the last few years, but continue to enjoy some modern conveniences while I can. I'd hate to be without my computer or my fridge & freezer and since I live out of town, I really need my little car to get to work. They tore up the train tracks 15-20 years ago to make us even more dependent on oil. I earnestly hope that one day those same people responsible for that folly will sit back and lament the fact that what they did was a terrible act, but that's doubtful. Those who make such environmental mistakes belong to the rich and powerful club. They'll always be able to afford fuel of whatever breed to get them around in luxury.

giv'em hell aime.

that's one of the reasons i press for democracy- pollies lead us into this dependence on fossil fuel, they won't lead us away fast enough.

electric vehicles, powered by sunshine collected off your roof and stored in batteries, are already close to competitive with petroil technology. just needs more r & d money, and the constricting availability of oil, before everyone will see it.

pollies will see it last, because they are looking at the corporations that finance election campaigns.