...is one of those things where I think critics really miss the point of what people are talking about.
I know supply curves slope up. I know prices signal to move on to other things. I'm also willing to grant that a lot of people who talk about peak oil don't know this (that's why it's good to teach economics!).
But this is not really what they're worried about. Even if the supply curve isn't perfectly elastic the worry is that it will get extremely inelastic and that you'll get lots of price signals about the skyrocketing marginal value of a barrel of oil and nothing will be on the horizon to replace it. All the prices will be sending information just fine, but that doesn't guarantee this will be a nice place to live.
I'm not all that much of a pessimist - natural gas seems to be a good option and environmentalists seem to be getting more reasonable on nuclear. But that's the concern.
You see this with discussions of full employment too.
Economists sometimes manage to get themselves into this position where as long as prices are flexible and markets are competitive they know there's a price vector that will work it all that and a microeconomic underpinning that'll get there... but they never seem to think much about whether that "there" is a good "there".
This is Keynes's question on full employment - is there a guarantee that general equilibrium will be a full employment equilibrium? No.
Is there a guarantee that the energy market equilibrium a couple decades from now will be an equilibrium where we all get to enjoy life the way we are enjoying life today? No.
Like I said, I'm an optimist but there's nothing in the functioning of markets that guarantees the good equilibrium result. What seems to be the best source of optimism is our tendency to innovate. That plus the market mechanism seems to offer good prospects for the future. But just citing the price mechanism doesn't really get at what people worry about when they worry about peak oil.