On the price of oil: for a long time, and certainly when I was studying economics back when dinosaurs still roamed the Earth in the late 1980s, the line was that as resources became scarcer, market prices would increase. Julian Simon certainly argued for this. But then, he's an idiot (well, now a dead idiot).

A more interesting and accurate view is argued by Gail Tverberg of "Our Finite World" blog (also "Gail the Actuary" at The Oil Drum): oil prices are constrained between the minimum supply cost imposed by extraction costs, and the maximum demand price based on use value. There are a number of analysts who've cited a price ceiling between around $80 and $115 (my money's on the higher end), over which, if prices rise (because of extraction costs), the global economy tanks.

Another way of looking at this is by considering the productivity of energy on a $GDP/barrel basis -- you can compute this by taking national oil consumption and dividing by GDP -- Wolfram+Alpha allows this easily. The present world price is around $110/bbl and has been reasonably stable there for the past few years. In the US, that barrel produces around $1000 of GDP (though there's a fair argument that this is the result of outsourcing more energy-intensive activity). For China and India the number's closer to $450 - $500/bbl.

Which means that between the oil cost of $110 and the economic value of $450 is all the value that India can access from that oil.

They might be able to increase this through efficiency improvements, but practically, increasing the price of oil means foregoing the previously economically viable activities which produced a low but positive benefit. Or, in other words, raising the cost of energy is an inevitable damper on economic output.

Yes, fracking's seen a transfer of energy use from both coal and oil to natural gas, where such substitution's been possible, but NG supplies are distinctly limited, and I've posted the total reserve exhaustion dates based on present consumption, growth trends (which "years of supply" arguments always leave out), and proven reserves. The dates aren't far off (I can't see my post from this page, but it was ~2030 - 2050 as I recall based on 2.7% to 2.2% growth -- not all that distant). And we don't have an option beyond gas (other than coal, which is suicide from a climate perspective) that we can simply dig out of the ground.

I find any predictions of peak gas made prior to 2009 extremely suspect, as they don't take account of extraction from shale oil fields.

Fracking doesn't produce new gas finds, it increases what can be extracted from known ones. As with peak oil, the story with peak gas is that the biggest discoveries are behind us: about 40 years ago during the 1970s. Fracking is only increasing the rate at which we're extracting a nonrenewable and finite resource.

Richard Heinberg and Gail Tverberg are two sources I'd strongly recommend for more on what the actual dynamics are.

http://www.ourfiniteworld.com (her "getting started" links are a great primer)

http://www.postcarbon.org/ Heinberg's published numerous books, The End of Growth covers much of the economic impact, Snake Oil addresses oil and fracking specifically.