As each one of these applications turns away from oil, the price of oil will temporarily drop or stabilize. Eventually we'll either be 100% off oil, or at a level where it's sustainable for 1000's of years.
Oh wait, that's free market economics, and I forgot that our president has announced that "that doesn't work any more."
Yes, far in the future, if we survive past when oil becomes truly scarce, either we will no longer use oil, or it will be used sparingly because we can't afford otherwise. Call it economics. Call it common sense. Call it whatever.
What you are overlooking is the transition period and the inelasticity of oil demand. There are a lot of things that run on oil. There are a lot of things that we have no good replacement in lieu of their oil consumption. When oil prices rise, if we don't have alternatives, then we will have no choice but to spend extra money on oil, which will cost more than it would because demand is higher. For some people, this will mean that they have less disposable income. For others, it will mean that they can no longer afford to drive to work. As the cost of shipping everything increases, some businesses stop being economically viable at prices the market can bear. Even if electric cars become the norm, how will things be shipped to Hawaii?
Yes, at higher prices, we will tap into oil shales, but because of the way oil is integral to so many things right now, nobody will be able to afford not to pay, and the consequences could be dire. Finding a way to wean ourselves off of oil will both postpone the problems of an oil shortage and lessen the cost when the shortage happens. The market won't magically cure our oil dependence, it will just give us a bigger incentive to cure it. It's better to act now, before everybody is had by the short hairs.
To put this all in a different way, if a drug dealer lost his supplier of heroin but he had a decent stockpile, then yes, down the road, his clients would no longer be using heroin. But in the mean time, they would pay more and more, go through horrible withdrawal as they could no longer afford to buy, and the aftermath would not be pretty. But if someone saw their plight, realized that the cost was going to skyrocket, and get them into rehab *before* they wasted their life savings, the cost (both human and monetary) would be greatly decreased.