Britain faces "oil crunch" within five years

Sunday, July 25, 2010 by: David Gutierrez, staff writer
Tags: Britain, oil, health news

(NaturalNews) The United Kingdom faces a crisis more severe than the global financial crash within five years, business leaders have warned in a report titled, "The Oil Crunch -- a wake up call for the U.K. economy."

"We face a situation during the term of the next government where fuel price unrest could lead to shortages in consumer products and the U.K.'s energy security will be significantly compromised,'' reads the report, compiled by a group of private companies.

The report warns that growing demand and dwindling supply make steadily rising oil prices inevitable. The price had already climbed to $147 per barrel before the global depression pushed prices temporarily down to $32 per barrel before they stabilized near $80 per barrel. This drop in demand has given the government more time to respond, the report says, by pushing back the "oil crunch" point two years.

The "oil crunch point" refers to the point at which global demand exceeds oil fields' supply capacities. In the next two years, the report says, prices are likely to rise past $100 per barrel. An oil crunch will hit within five.

This would have severe consequences for the U.K.'s economy, the authors warn, and any country that relies heavily on energy imports. It would produce a massive increase in the price of heating, transportation, food and other products, creating an economic crisis far outstripping the current one.

"[Shocks would] quickly reverberate throughout the UK's supply chain," said co-author Robert Falkner of the London School of Economics.

The authors recommend that the government end its £9 billion ($14 billion) tax break on domestic airline fuel and redirect that money toward public transportation. They also recommend a drastic reduction in car travel.

"Air travel and road haulage are now the key reasons behind our dangerous addiction to oil," Falkner said.

"The UK's freight network, cars and public transport systems are almost entirely dependent on oil," said Brian Souter, CEO of a bus and train company. "The twin threats of the oil crunch and climate change make that unsustainable."

Sources for this story include: www.telegraph.co.uk/finance/financetopics/oi....