Petroleum is useful for making plastics. Many useful plastics can be made from soybeans, though. When it is cheaper to make something from soybeans than petroleum, that is what will happen. There won't be a total shutoff of oil anywhere, this will be a gradual process, just as the shift from coal to oil and whale oil to kerosene was a gradual process.
The government could and should strive to encourage the development of alternate energy. Giving the oil companies the choice of developing these or paying more taxes is a good idea. It would also be a good idea to lift the embargo on importing alcohol from Brazil. The whole ethanol from corn process depends on subsidies, and these should be phased out, so that they can develop fuel from crops that can be grown on marginal land without irrigation and fertilizer, like switchgrass and jojoba.
Big Oil has lots of sweetheart deals with the Juniorbush government, and these are not to the advantage of most of the people. Personally, I fill my tank with biodiesel (about 40 cents a gallon cheaper than dinodiesel) about 10 gallons per week, and I have invested rather heavily in natural resources funds, so I am personally profiting from expensive gasoline more than I am being ripped off. Not being an idiot, I see no reason to swim against a current I cannot control. In the words of Paul Simon, "who am I to piss against the wind?"
If you would like to benefit from the current silly pro-Big Oil policy too, I recommend FSESX, RYDEX and PRNEX funds as good choices to do this. USO is a bit too volatile for my taste. Naturally, check these out on your own, because my advice is not guaranteed and past performance is no guarantee of future success. EWC is a pretty good Canada ETF (exchange traded fund), with a lot of it involving the Canadian oil boom.
