UK Energy minister will hold summit to calm rising fears over peak oil  

Posted by Big Gav in

The Guardian reports that the UK Government is starting to wonder if peak oil might be something they need to be concerned about - Energy minister will hold summit to calm rising fears over peak oil.

Lord Hunt, the energy minister, is to meet industrialists in London tomorrow in a bid to calm mounting fears about the disruption that could follow a sudden shortage of oil supplies.

In a significant policy shift, the government has agreed to undertake more work on whether the UK needs to take action to avoid the massive dislocation that could be caused by the early onset of "peak oil" – the point that marks the start of terminal decline in global oil production. ...

The issue of peak oil arose last November when whistleblowers inside the International Energy Agency alleged the problem had been deliberately downplayed over a long period. BP and other oil companies insist that there is little danger of the world running out of oil because new areas such as Brazil, and more recently Uganda, are always opening up to development. BP chief executive, Tony Hayward, believes demand will fall as prices move up., pushing back any major peak-oil dislocation.

But booming demand in China, India and the Middle East has pushed up the price of crude to more than $80 a barrel and UK petrol prices are close to record levels.

Amrita Sen, an oil analyst at Barclays Capital, believes the price of crude could pass $100 this year and reach nearly $140 by 2015. Francisco Blanch, of Bank of America Merrill Lynch, has speculated it could hit $150 within four years.

Leggett says all these scenarios could be much too optimistic. He is convinced that Britain must prepare as quickly as possible for a situation when oil becomes so expensive that international trade is hampered and globalisation breaks down.

Peak oil used to be the preoccupation of a small minority, but a parliamentary group has been set up to follow the issue and an increasing number of industrialists have begun to worry about it.

Ian Marchant, Scottish and Southern Energy's chief executive, is one who now believes global demand for oil is on the brink of outstripping the ability to produce it. At the launch of the Oil Crunch report, he said: "The west has been far too profligate in its use of oil and the price is going to say: stop it now and start using your oil as a scarce commodity."

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