A global energy war could become a reality unless governments and people make painful adjustments to cope with dwindling oil reserves, an international energy expert has predicted.
Matthew Simmons, a former energy adviser to US president George Bush, warned that global oil production was now close to "peak" level and would decline irreversibly.
Mr Simmons who is chairman of Simmons & Co - a US-based investment bank that specialises in the energy industry - was speaking at the University of Limerick. As crude prices hit a record high of $74 a barrel yesterday, Mr Simmons claimed that oil was still selling at a price far below its true value.
In an address entitled "Will 'Twilight in the Desert' mean Economic Eclipse for Europe", Mr Simmons dismissed suggestions that oil prices were rising too fast and said he believed the real price of oil should peak at $180 a barrel in the next decade.
He pointed out that the price of a cup of oil on international markets was now less than the price of a cup of coffee and he said that that situation was unsustainable.
"The price of oil just seems high because it was so cheap for so long. If you convert a barrel into a gallon and then divide gallons into cups, then $74 a barrel is about 10 cents a cup. I don't believe we sell anything in the world anymore for as little as this. Oil is a finite scarce resource so I think the price needs to go way up from here," he said.
The international energy expert said that global demand for oil has grown by 15 million barrels per day in the past decade to the present level of 90 million barrels per day.
He predicted that global demand for oil would reach 120 million barrels per day by 2020, which could trigger a global energy war unless urgent action was taken.
"If you look at the history of the 20th century, every war we had was anchored on one country trying to get energy security so I don't think the concept of a global energy war is farfetched, but it doesn't have to happen."
Mr Simmons suggested that a global energy conference would be a major first step in addressing dwindling oil supplies allied to increased demand. "Unless we want to have a terrible vicious energy war we better work on a concerted way to actually start using less oil, particularly in the way we transport people and goods," he said.
Mr Simmons outlined a series of conservational approaches and "painful adjustments" which he said needed to be implemented to avoid a global energy war.
He advocated a major shift in the way goods are transported in the marketplace from a dependence on road infrastructure to rail and water transport.
"We have to stop this trend we have today of wanting to move goods by large trucks over long distances. This is the most energy inefficient way we use oil today."
He also suggested that another way to preserve dwindling oil supplies was to "liberate" the workforce by allowing people to work from home to reduce petrol consumption and associated energy costs with car manufacturing.
Mr Simmons said that two decades of poor data and analyses of poor data on oil production and supplies were major contributors to any possible energy crisis.
"The longer we wait then the less time we have to react. We need to decide today to get going on a solution and if we turn out to be three years premature about the prospect of peak oil production, then all the better."
