Demand for oil to outstrip supply within two years  

The (Perth) Sunday Times has an article on recent talk of peak oil - Demand for oil to outstrip supply within two years .

RISING oil prices pose a grave threat to global economic recovery, according to some experts. The fear has been expressed by the US military and by the automobile industry.

This week in Perth, Volvo's head of product planning, Lex Kerssemakers, said "we all know that oil is running out''. "We need to find alternative solutions and though we are aware of the alternatives - LPG, CNG, ethanol, electric and so on - we have to introduce these to the market,'' he said. "If we don't do it now, we won't be ready in five years when oil may be prohibitively expensive.''

Mr Kerssemakers said Volvo would have an eelctric car on the world market in 2012 that would use less than 1.5 litres/100km of fuel - about one-tenth of that used by a current V8-engined sedan.

Volvo is not alone in the race to produce more fuel-efficient vehicles - all car companies are either developing alternative engined or fuelled vehicles by themselves or in partnership with other car companies that, in many cases, were once their fierce rivals.

The US military this week warned the world faces a "severe energy crunch" and looming oil shortages. According to a Joint Operating Environment report from the US Joint Forces Command, "a severe energy crunch is inevitable without a massive expansion of production and refining capacity".

The report says the central problem for the coming decade "will not be a lack of petroleum reserves, but rather a shortage of drilling platforms, engineers and refining capacity". And it warns: "Even were a concerted effort begun today to repair that shortage, it would be 10 years before production could catch up with expected demand."

More ominously, the military predicts a "Peak Oil" scenario - where demand outstrips the world's supply capacity - as soon as 2012.