UK Report Warns of Oil Shortage

A new report by a prominent energy research firm warns that the world's oil supply could start to dry up over the next 10 years. In a report unveiled at an International Energy Agency meeting in Paris, the UK Energy Research Center said petroleum production is likely to peak by the year 2020 leading to global shortages as supplies taper off.

The world's demand for oil is unsustainable. That's the warning from a new report delivered at the International Energy Agency's ministerial meeting in Paris.

According to the U.K. Energy Research Centre, world oil production is likely to peak before 2030. The report's author, Steve Sorrell, says the global supply could start to dry up sooner.

"The basic physical features of the resource mean that production will start to decline at some point and will continue to decline and no amount of investment is going to turn that process around," Sorrell said. "Ten years, 15 years, even 20 years is not far away."

The meeting of energy ministers from the 28 IEA member countries is looking at key energy challenges facing the world today. IEA executive director Nobuo Tanaka's says among them, higher prices.

"Already cheap energy price age is over," he said. "Cheap oil age is over. That is our message."

The world currently produces about 85 million barrels of oil per day. Estimates show production will rise to over 100 million barrels before oil resources begin to run out.

But some research groups say production will be sufficient well into the 21st century.

And some oil companies argue new fields discovered in Angola, Brazil and the Gulf of Mexico should be able to satisfy demand.

Sorrell disagrees.

"Even if you assume and make optimistic assumptions about the size of the resource, you assume that the investment takes place and these areas are open to access, the evidence still points to constraints within this period of time," he said.

Although the recession and the popularity of fuel efficient vehicles has reduced demand in the United States, OPEC (the Organization of Oil Exporting Countries) says demand for oil is growing faster than anticipated due to an improving global economy and increased consumption in developing countries.