US military warns of oil shortages in just five years

THE US military has warned demand for oil could outstrip supply as soon as 2015 and cause significant political and economic impact.

Known as 'peak oil', the consequences of oil shortages could lead to a slowing of economic growth at a time when the globalised economy is struggling to get back on its feet.

The warning has become starker after the BP oil rig disaster in the Gulf of Mexico on 20 April. The accident has forced President Obama to reverse the decision he had made the previous week to allow oil drilling off the US coast.

The Joint Operating Environment report from the US Joint Forces Command states: "By 2012, surplus oil production capacity could entirely disappear, and as early as 2015 the shortfall in output could reach nearly 10m barrels per day.

It adds: "While it is difficult to predict precisely what economic, political and strategic effects such a shortfall might produce, it surely would reduce the prospects for growth in both the developing and developed worlds.

"Such an economic slowdown would exacerbate other unresolved tensions, push fragile and failing states further down the path toward collapse, and perhaps have serious economic impact on both India and China."

The report contrasts sharply with the message of the Wick's report on UK energy policy, released last summer, which dismissed fears of peak oil in the foreseeable future.

The Paris-based International Energy Agency (IEA) also denies there is any short-term risk of oil shortages.

However senior officials in the IEA admit in private that there is considerable disagreement about this optimistic outlook.

The US military is thought to be the biggest single user of petrol in the world, making the procurement of future supplies a high priority. However with a moratorium on offshore drilling in place the US armed forces are likely to rely on oil from the politically unstable Middle East for some time to come.

The Joint Operating Environment Report provides a bleak historical precedent for the possible future we face: "One should not forget that the Great Depression spawned a number of totalitarian regimes that sought economic prosperity for their nations by ruthless conquest."