It's much, much worse than that.
As we approach, and pass, peak oil, the cost of oil goes up. This is worrisome, but it is only the beginning; as things now stand, the peak oil crisis is set to start off a chain of unpleasant events the likes of which the world has never... Well, judge for yourself.
As the cost of fossil fuels go up, people will find other, cheaper ways of meeting their energy needs. Currently, the primary way to fuel a car without fossil fuels is through ethanol. Ethanol comes primarily from corn, although it can be produced from other plants.
Corn, and all other plants, require land, water, and nutrients to grow. All three of these resources are limited. All three of these resources are being used at very near 'peak use' in most parts of the world. This means that every acre used to grow fuel-producing crops will require us to give up an acre used to grow food-producing crops. This means that producing fuel causes a drop in the amount of food coming to market. This means a rise in food prices.
"Converting the entire U.S. grain harvest to ethanol would satisfy only 16 percent of U.S. auto fuel needs."
-- Lester R. Brown, 2007
There isn't enough viable farmland to provide all the food and all the fuel we need; we will need to cut back on both fuel and food in order to live at anything approaching the standard of living we are used to.
Technically, land area is not the problem; nutrients and water are. Nutrients are problematic because we already depend on fertilizers derived from fossil fuels to keep our crop production up; once fuel is in short supply, we will have to change what crops we grow, and will probably have to grow less. Water is also currently in short supply in many areas. Cities usually deal with this by buying water rights from farmers. But as the value of crops go up, farmers will be much less willing to sell water rights, leading to major water shortages. If agriculture is actually ramped up to provide 50% of our energy needs, there will be no water. Anywhere. We will have exceeded all water supplies produced by all sources.
All of this also means that the richest countries in the world will have to choose between either driving to work or feeding the poorest countries in the world. America currently provides over 40% of world grain exports. We cannot export this grain and still meet even 16% of our fuel needs. Egypt and Mexico do not produce enough food to feed themselves. (Neither does Japan, putting it in a very interesting position). Countries like Ethiopia, Afghanistan, and Sudan already rely on food aid, and as the prices of food go up, they will get less and less. And even when the need for food crops is the greatest, we can only expect the supply to go down. China has been losing harvests to water shortages since its harvest peaked in 1997. China is by no means alone in this predicament, and the situation promises to get worse as aquifers continue to go dry and populations continue to increase. We can expect large portions of the world's population to starve. We can expect other portions of the world's population to try to avoid starving by taking resources from those that have them -- and take them by any means necessary.
If you think peak oil is bad, imagine peak food.
There are a surprising number of things we can do to make the future less dire. Improving the fuel efficiency of new cars, switching to electric power whenever possible (although this only helps if the electricity comes from solar, wind, and other 'unlimited' resources), improving our methods of farming, conserving water however possible... The human race will make it through this, and life will be quite tolerable after things settle down. And in the meantime, those who starve will be people we don't know and will never see.
We also have the option of being very, very proactive. We could introduce these changes on a larger scale, even before we are forced to, and even in countries too poor to do so on their own. It would require a lot of people to change their behaviors, and quickly. It would not be fun. But wouldn't it be nice....
Sources and resources:
http://www.earth-policy.org/Updates/2007/Update63.htm
http://www.earth-policy.org/Books/PB3/Contents.htm