When will the oil run out?

It won't. Certainly not in the sense that humans will ever empty the last oil well of the last drop. Yes, the supply must be finite, and yes, we are using it at an alarming rate, but long, long before we get to that last well the stuff will have become so expensive that all but a tiny minority of us will be living without it.

That process may have begun, as the huge jump in demand, particularly from China, combined with the Iraq war and other political uncertainties, have driven prices up sharply. Though there is a near-universal expectation that the price will come down from those peaks, it may well settle higher than before. If there is a staircase, we have moved up a step.

Even so, it is a mistake to assume, as people have done almost since the first oil was struck, that the end, the last well, must be in sight, however distantly. As Donald Rumsfeld might put it, we know what we know - roughly how much oil is left in the oilfields we have discovered - but we don't know what we don't know - how much there is in places we haven't looked.

And it would be another mistake to imagine that we haven't looked in those places because we don't expect them to have oil. All over the world there are pockets of geology - under the Alps and the Andes, for example, and in the deep oceans - that appear promising to the oil prospectors. It's just that, at the moment, it would cost more to extract any oil you found there than you could sell it for.

As prices rise, these new fields, as well as the more awkward corners of old fields, become exploitable. It is already happening: today prospectors drill in 2,000 metres of water, where only a few years ago 1,000 metres was the limit. Higher prices also bring in new technology, enabling oil to be extracted in bulk from oil shale, for example.

So the higher the price, the more oil will turn up. But that doesn't mean we are off the hook, because higher prices will mean hard choices. First, this oil may be too precious to use for film DVDs and Evian bottles. Then it will be non-essential travel such as school runs and holidays. Then mobile phones and computers will jump in price. Poor countries and poor people will struggle to pay for oil and oil products. The world will begin to change.

It is not the oil that is running out, because, at a price, we will find more and more of it. It is the cheap oil.