Press Association
Sunday 14th March 2010
Sir Richard Branson and other business leaders will warn this week that the world is hurtling towards an "oil crunch" to match the financial crisis within five years.
In a report due to be launched on Wednesday, the Virgin Group founder will say that the world is running out of oil and that the coming challenges may be more serious than the credit crunch.
Sir Richard - whose airline and rail businesses are sensitive to volatility in the cost of crude - has joined other company chiefs in warning of price spikes and shortages in the near future without drastic action.
"The next five years will see us face another crunch - the oil crunch," the report said. "This time, we do have the chance to prepare. The challenge is to use that time well."
The report is compiled by the Industry Taskforce for Peak Oil and Energy Security, a group of private British companies whose members include Sir Richard, Brian Souter, chief executive of Stagecoach, Scottish & Southern Energy boss Ian Marchant and Philip Dilley, chairman of consultancy firm Arup.
The group said the UK economy is particularly dependent on oil - from transportation to retail - and urged any new Government to produce a coherent set of policies to enable the country to adapt to a future of high cost oil.
"Our message to government and businesses is clear. Act now," the group said. "If we don't, we run the risk of a return to the oil price shocks of the 1970s with all the inherent uncertainty and trauma that brought. Don't let the oil crunch catch us out in the way that the credit crunch did."
It said fuel shortages could lead to shortages in consumer products, while the UK's energy security "will be significantly compromised" and the impact of climate change makes the challenge all the more urgent.
Oil price shocks could also "destabilise economic, political and social activity" and have the potential to hit the most disadvantaged in society hardest.
The report comes amid general fears about future energy security and costs in the UK. A recent report by energy watchdog Ofgem warned that electricity and gas may become unaffordable for an increasing number of households unless drastic action is taken to secure power supplies.
