LONDON: The world faces an oil supply crunch within the next five years, British business leaders led by Virgin tycoon Richard Branson warned on Wednesday.
The rate at which oil is produced risks hitting a peak by 2015, sparking a surge in crude prices and living costs, said a report from the UK Industry Taskforce on Peak Oil & Energy Security (ITPOES), of which Branson is a member.
The report, entitled 'The Oil Crunch - a wake up call for the UK economy', urged the formation of new organisation to address the issue, with members representing the British government, businesses and consumers.
"The UK Industry Taskforce on Peak Oil and Energy Security (ITPOES) finds that oil shortages, insecurity of supply and price volatility will destabilise economic, political and social activity potentially by 2015," the report said.
"Peak oil refers to the point where the highest practicable rate of global oil production has been achieved and from which future levels of production will either plateau, or begin to diminish.
"This means an end to the era of cheap oil," added the report from the taskforce, whose members include British tycoon Branson and Ian Marchant, head of Scottish & Southern Energy.
ITPOES forecast global oil output would reach a plateau at fewer than 95 million barrels per day potentially by 2015. That compared with 2008 global production of 85 million bpd.
"The taskforce states the impact of peak oil will include sharp increases in the cost of travel, food, heating and retail goods," the report added.
"It finds that the transport sector will be particularly hard hit, with more vulnerable members of society the first to feel the impact."
With Britain facing a national election by June, the grouping also warned that any new government must deal with the looming oil crunch.
"The taskforce warns that the UK must not be caught out by the oil crunch in the same way it was with the credit crunch and states that policies to address peak oil must be a priority for the new government formed after the election."
It added: "Unless we do so, we face a situation during the term of the next government where fuel price unrest could lead to shortages in consumer products and the UK's energy security will be significantly compromised."
Supply-side constraints - lack of construction capacity, oil rigs and skilled manpower - would all contribute towards peak oil, according to the taskforce.
The group also called for the development of alternative methods to powering transport.
Branson, founder of Virgin Group, added that businesses and the government must work alongside each other.
"Working together, we must ensure that the government takes action to address the impact of the oil crunch and ensure the UK is better prepared to withstand higher and more volatile oil prices," Branson said.
"UK competitiveness will be hampered unless we can develop viable, affordable and secure long term sources of alternative energy."
In recent years, oil prices have been extremely volatile, spiking to record heights above 147 dollars per barrel in July 2008, before plunging to 32 dollars per barrel as a global recession slammed energy demand.
World oil prices have since recovered ground to trade between 70-80 dollars as the market was boosted by signs of global economic recovery. - AFP/de
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