World oil production:

http://www.eia.doe.gov/aer/txt/ptb1105.html

2005 =73.81, 2006 =73.54, 2007 =73.27

i.e. production is dropping even as demand is rising.

Non conventional oil from stuff like Canadian tar sands is increasingly buffering it:

Canadian production 2001 - 2005 (from same eia data):

2,738.41 2,868.79 3,029.47 3,056.80 3,014.31

And the drop off is brutal, see US production for details of that:

U.S. production from 2002 to 2007 (x1000 barrel per day) continues to collapse:

5,746 5,681 5,419 5,178 5,102 5,064

So lets get real here, we're past the peak of conventional, and in the not to distant future we'll go past the non conventional peak. US$ will collapse (too much debt and too inefficient in it's use of oil), and the climate will be just fine.

So pretending that we can't afford to reduce CO2 ignores the reality that we WILL reduce CO2 because WE HAVE NO FRIGGING CHOICE.