Anyone who has been filling up at the pump for a while understands that oil prices often appear to defy logic. They may rise during recessions, and then, just when everyone is convinced the world is running out of oil, they fall dramatically – like they did at the end of last summer’s run.

This does not mean that there are no economic explanations behind oil price swings, just that they tend to be a lot more intricate than even many serious economists appreciate.

Certainly, if the world were about to run out of oil, we’d all be paying a lot more at the pump: oil prices would not just be volatile, they’d be moving higher and higher. You can only skirt the laws of supply and demand for so long.

Still, the theory of Peak Oil persists. For practical purposes, this is not just the argument that oil is finite in supply and will at some point run out; it’s the theory that that time is either upon us, or has already passed, and that the world is already well on its way to a point where there will be No. More. Oil.

Let’s suppose you know nothing about would oil supply and all the new and improved methods for extracting oil that have led to production in many places that were once not considered feasible. You’d probably still find it curious that inflation-adjusted oil prices today are lower than they were 30 years ago, if indeed the world had already passed its peak supply. The world, in other words, is not anywhere close to peak oil.

There’s recently been some badly-needed discussion dousing water on the notion of peak oil. This New York Times op-ed says that those who promote the idea of peak oil base their conclusions on “anecdotal information, vague references and ignorance of how the oil industry goes about finding fields and extracting petroleum.”

New, more sophisticated extraction methods do not just improve production volumes on the margin. A consensus of geologists now place the world’s reserves of recoverable oil at ten trillion barrels, some eight trillion more than what the peak oil folks say. The fact that scientists with a deep understanding of how oil gets out of the ground believe there is that much oil yet to be produced, points the flimsy science on which so much peak oil fear mongering has been based.

But just assume, for a moment, that all the most optimistic estimates of reserves are the correct ones and that the world has so much oil that conservation is not necessary, even as rapid development in India and China leads to explosive growth in demand. Just because we don’t need to conserve doesn’t mean we shouldn’t. Just because we may not, from a supply perspective, need to invest in alternative sources of energy, doesn’t mean those investments are for naught.

Debunking the notion of peak oil is important for all sorts of reasons, and should help pave the way for a more honest discussion of energy policy. But this “discovery” of new oil should not be taken as a reason to consume with abandon.

For one thing, there’s still that pesky matter of where the oil comes from, and the problems of being dependent on overseas sources.

Reaching agreement on world reserves should also be seen as a means to work toward more price stability. Understanding that sudden price spikes are not the result of a worldwide shortage, should help policy makers better address the real causes of this volatility.