One of London’s oldest and most respected financial institutions projects “catastrophic consequences” if businesses fail to prepare for the phenomenon called peak oil. Along with the Royal Institute of International Affairs, also called Chatham House, Lloyd’s of London issued a white paper entitled “Sustainable energy security: strategic risks and opportunities for business.”
In the white paper, the group warns that businesses need to prepare for a spike in the price of oil, as a result of a global supply crunch. Growing economies, particularly in Asia, will continue their rapid increase in oil consumption just as supplies begin to “peak” around the world.
The report depicts a shocking scenario where oil gets as expensive as $200 per barrel, or even higher, as rising demand hits falling supply. Crude oil futures could triple from their current levels relatively rapidly.
That oil will eventually peak is undeniable – the only question is when. There are, by definition, limited supplies of non-renewable fuels like oil, and most of the world’s transportation and agricultural infrastructure now depend on petroleum fuels.
The prices of food will likely also spike with the price of oil, reflecting the higher cost of that key input.
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