Industry taskforce warns UK over 'Peak Oil' scenario

Oil shortages, insecurity of supply and price volatility will destabilise economic and social activi

A group of business leaders have warned that UK is unprepared for significant risk to companies and consumers and they urged for the formation of a coalition of government, business and consumers to address the issue.

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.

The taskforce said that the poorest will be hit hardest by price rises for travel, food, heating and consumer goods. Having assessed the systemic changes caused by the global economic recession, coupled with the projected growth from non-OECD countries, the taskforce predicts Peak Oil will occur within the next decade, potentially by 2015 at less than 95 million barrels per day.

The study finds that the recession has delayed the oil crunch by two years, which provides time to plan for a future which will see structural increases in oil prices coupled with shortages and increased market volatility. The UK will be particularly badly hit by these factors with a tightening of supply leading to greater oil import dependency, rising and volatile prices, inflationary pressures and the risk of disruption to the transport system.

The report recommends acceleration of the 'green transport revolution' to see the ongoing introduction of lower carbon technology and trials of sustainable bio fuels. It also recommends a focus on new clean technologies to be combined with wide scale behavioural change promoted through incentives and education to produce a modal shift to greener modes of transport.

Richard Branson, founder of Virgin Group, said: "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. UK competitiveness will be hampered unless we can develop viable, affordable and secure long term sources of alternative energy."