Oil production is relatively inelastic in the short term, in the sense that it takes years to scout new fields and make the necessary investments in infrastructure. But then, so is demand, and future demand is relatively predictable. Even hypothesizing that oil companies didn't predict ten years ago that demand for petroleum would be at its present level today, and didn't plan for enough capacity, we would expect that by now they've realized their mistake, and that prices should go back down as additional capacity comes online.
It doesn't matter what they predicted; global oil production likely peaked in the last few years and no amount of wishful thinking is going to make more of it suddenly appear. Almost nobody in the industry seriously believes that production will increase in the medium to long-term; a lot of people don't even believe a short-term increase is possible. Falling production, rising demand and the lack of effective substitutes are all driving up prices. Over the next 10-20 years there is just no foreseeable means of reversing _any_ of these trends.
http://en.wikipedia.org/wiki/Price_elasticity_of_supply