The world is facing a dangerous "oil crunch" in as little as five years, and the Government needs to starting working on solutions now to avoid major economic and social problems, a cross-industry group warned yesterday.
"Peak oil" is the point at which the rate of extraction exceeds the discovery of new supplies, with considerable economic and political consequences for energy-hungry countries reliant on oil for everything from energy to pharmaceuticals to agricultural fertilisers.
Timetables vary, but the taskforce of eight companies, including Stagecoach, Virgin and Scottish & Southern Energy, is predicting the end of cheap and easy oil supplies as early as 2012. Even Royal Dutch Shell, commissioned to write a balancing view for the group's report, is forecasting a plateau ofsupply as production moves to more difficult sources such as ultra-deeplayers and tar sands.
"We are going to reach a peak in the early part of the next decade," said Will Whitehorn, the cross-industry group's chairman and president of Virgin Galactic. "If we are going to avoid a crunch we need to invest now." The groupbelieves a national energy plan should urgently implement accelerated energy conservation and more investment in renewable resources.
Jeremy Leggett, executive chairman of taskforce member Solarcentury, said: "The difference between the credit crunch and the oil crunch is that we have five years in which we could try to engineer a soft landing, by beginning the restructuring ahead of time."
The gloomy predictions are supported by the latest data from the International Energy Agency, which suggest that annual oil production worldwide is falling faster than expected.