A U.K. industry taskforce has called on the British government to act now to protect the economy against a potential new threat of rising oil prices.
The group, the UK Industry Taskforce on Peak Oil and Energy Security (ITPOES), a consortium of British business, including retailers Kingfisher and transport group, Stagecoach, said the country must prepare for the next oil shock. Otherwise, the nation would face energy security problems.
Although the price of oil is currently about $80 per barrel, far below the all-time peak of $145 from two-and-a-half years ago, the group warns a new peak oil threat will likely be felt in the UK within the next five years.
“Peak oil” is the point at which the maximum rate of global petroleum extraction is reached, after which the rate of production enters a terminal decline.
In the wake of the Gulf of Mexico oil spill, the group warns, tighter regulation of deep-water drilling could lead to a rise in oil prices.
“The impact of the spill is most likely to be felt in project delays due to new legislation, tighter controls or more inspections of deepwater installations,” the group stated.
The taskforce indicated that deepwater drilling is expected to constitute 29 per cent of new capacity by 2015, up from only 5 per cent today.
“The result is that any future delays or problems associated with deepwater drilling will have much greater impact on supply than is the case today,” it said.
Sir Richard Branson, head of Virgin Group, a member of the industry taskforce, said the Gulf disaster had raised the odds of an oil crunch in the coming decade.
The time to take out our insurance policies against such an outcome is now,” Branson stated. “We must do this to avoid the horrible shocks to the UK economy which will be mirrored in many other parts of the world.
The group also warned that without an effective and coordinated response from ministers to protect the economy and society from rising prices, the cost of travel, food, heating and consumer goods would surge.
IPTOES has called on the new Coalition Government for swifter action to help the UK switch to more sustainable energy sources to help reduce the UK’s dependency on oil. The group recognizes that a series of low-carbon initiatives are in place but believes that the impending oil crunch demands that mobilization of these technologies and tactics be significantly speeded up.