Then there's the Achilles' heel of oil: alternative fuels and the vehicles they power. Just as the solar technology made by JA Solar (Nasdaq: JASO) and Trina Solar (NYSE: TSL) becomes more attractive when fossil-fuel prices rise, high oil prices increase demand for alternatives such as hybrids and hydrogen-cell cars. The development of these sorts of substitutes for the fuels can act as a price ceiling for oil -- affecting all of the oil players from the titans like ExxonMobil to the merely large like Apache (NYSE: APA) and Devon (NYSE: DVN) on down.

Thus, I view the promise of alternative energy as a long-term capping mechanism on runaway oil prices.

OK, so is oil a buy?
The question boils down once again to supply and demand. If peak oil is a way off, demand slackens, and alternative-energy options evolve quickly, a high oil price isn't justified. But if our oil supplies become constrained, the world greatly increases its energy lust, and alternative-energy players hit snags, it's off to the races.

Here's an additional data point to keep in mind. After admitting his timing error on ConocoPhillips, Buffett went on to say, "I still believe the odds are good that oil sells far higher in the future than the current $40-$50 price." Before we dismiss his opinion because of his poor judgment on ConocoPhillips, let's remember his investment in PetroChina .

In 2007, he sold shares he'd bought just five years before, for more than a 700% gain! Since then, PetroChina's stock price has plummeted to nearly half of where it was when he sold.

Buffett's optimism is certainly encouraging. But regardless of the supply and-demand outlook, I think some exposure to oil companies makes sense as an insurance policy. When the price of oil rises, most companies -- from manufacturing conglomerates such as 3M (NYSE: MMM) to tourist-centric companies such as Disney (NYSE: DIS) to shippers such as UPS (NYSE: UPS) -- suffer from higher input costs and slackening demand. An investor's best defense lies in owning stock in the oil companies that stand to benefit.

In the near term, our dependence on oil isn't going anywhere, and the general trend of rising marginal costs of production provides a cushion for oil prices. That was certainly true in Buffett’s $40-to-$50 oil range. The argument to load up on oil stocks is less compelling in the $60s and $70s, but the argument for a reasonable oil exposure as a hedge against skyrocketing energy prices still holds.