I just ran across this WSJ editorial, it's actually two weeks old, but I like to read the con side of the argument, to see what they're thinking.
The authors suggest that there's a lot of oil waiting out there, that it is not terribly costly to extract and won't be for a while, and that the main problems are that much of the cheap oil is in volatile regions, and we haven't chosen to invest in the other areas (Canadian oil sands primarily) that could produce more because Saudi Arabia could basically open the spigots on their low cost oil and wipe out our investment overnight.
Ok. Couple of problems.
If there is so much oil out there, why isn't anybody running across it? Folks are exploring many places (ask the Chinese) and yet the number of big finds is down to essentially zero. Many areas of the Middle East are restricted, so it's not clear what exactly their situations are since there are questions on the accuracy of their reserve estimates.
Secondly, costs are escalating as ExxonMobil would tell you (see mention of Caspian area in prior post). In fact, the major oil companies generally [registration required] are buying back stock, buying other companies, or paying dividends rather than raising exploration budgets sizably. Some suggest this is a "capital discipline" move on their part, as oil companies get nervous oil prices will eventually collapse like they did in 1998. Others suggest it's because there's just not much left to explore except the deep sea, which is very expensive. But if $47 oil isn't incentive to poke around more, something's probably up.
Finally, oil sands, while promising and sizeable, cannot entirely fill our needs. Oil sands involves essentially manufacturing oil, not extracting it. There is a big difference in the process as well as the cost. The plants are expensive, require maintenance, break down, have certain production volumes. I am no expert, but I doubt they could ever be anything more than an adjunct to other oil supplies, given the current demand for oil. And keep in mind turning oil sands to oil requires prodigious amounts of natural gas.
Finally, on the question of Saudi Arabia opening the spigots, flooding the market and driving down prices, they already did that as part of their "Get out the vote for Bush" campaign this summer. That sure worked, but oil prices buckled but did not break. In my opinion, that really says something.