$500 a barrel? How high could oil prices rise?
It鈥檚 all doom and gloom for the UK鈥檚 Ministry of Defence! Unlike the conservative and relatively optimistic reports published by the government, a recent report released by the MoD warns that current energy trends could threaten the Western way of life by 2040.
The report states that as reserves of easy-to-extract oil deplete, climate change reduces the amount of food produced and drinking water available, and population continues to rise, energy prices are likely to soar and remain high for the long term, causing long recessions in Western economies.
The British government supports the IEA estimates that oil prices will peak around听"$125/barrel in real terms (over $215/barrel in nominal terms),鈥澨齱hereas the MoD report suggests oil prices are more likely to grow exponentially, and finally reach $500 a barrel by 2040; with the high prices encouraging more effort to develop alternative fuel sources.听(Related article:听)
The report notes that听鈥渢he growth of South Asian economies will impact on most western nations, where the way of life for the majority of the populaces may be challenged by rising energy and resource prices, coupled with a relative decline in the value of their national economies.
The economic and industrial rise of China and India will increase the cost and reduce the availability of UK energy supplies. As a resource-importing nation, and with relatively modest fossil fuel reserves, the UK will be affected by increased resource and commodity costs. The UK will increasingly need to compete with China and India in order to secure enduring access to energy.鈥�
The MoD believes that the Western way of life will be increasingly challenged as levels of energy, GDP, and therefore lifestyle, begin to normalise across the globe.
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