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Oil shock warning to government from UK business

2010-11-19 08:45:37

An industry taskforce has called on the government to act to protect the UK

economy against a new threat of rising oil prices.

A consortium of British business, including retailers Kingfisher and transport

group, Stagecoach, say the UK must prepare for the next oil shock.

It says not to do so would present energy security problems.

A barrel of oil is currently around $80 a barrel, well below the last peak of

$145 two-and-a-half years ago.

But the group says a new "peak oil threat" is likely to be felt in the UK

within the next five years.

Peak oil is the point when the maximum rate of global petroleum extraction is

reached, after which the rate of production enters a terminal decline.

The group, the UK Industry Taskforce on Peak Oil and Energy Security (ITPOES)

has produced a briefing update called Peak Oil: the implications of the Gulf of

Mexico spill.

It warns that in the wake of the Gulf of Mexico oil spill, tightened regulation

of deep water drilling could see oil prices rise.

'Horrible shocks'

Sir Richard Branson, whose Virgin Group is among the members of the industry

taskforce, said the disaster in the Gulf had increased the chances of an "oil

crunch" in the coming decade.

He said: "The time to take out our insurance policies against such an outcome

is now. 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 warned that without a strong and co-ordinated response from ministers

to protect the economy and society from rising prices, the cost of travel,

food, heating and consumer goods would rise.

It is asking for improved government support for renewable energy technology

and energy efficiency measures.