$500 a barrel? How high could oil prices rise?
Current energy trends could threaten the Western way of life by 2040 when oil prices could reach as high as $500 a barrel, according to a recent report from the United Kingdom's Ministry of Defence. The continued rise of China and South Asian economies will increase the cost and reduce the availability of energy supplies.
An oil pump works at sunset in the desert oil fields of Sakhir, Bahrain. As reserves of easy-to-extract oil deplete, and population continues to rise, energy prices are likely to soar and remain high for the long term, according to a new report.
Hasan Jamali/AP/File
It’s all doom and gloom for the UK’s 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 "$125/barrel in real terms (over $215/barrel in nominal terms),” whereas 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. (Related article: Boom in Production of ‘Technological Barrels’ of Oil Drives Prices Down)
The report notes that “the 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.”
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.
Original Article: http://oilprice.com/Latest-Energy-News/World-News/British-MoD-Predicts-Oil-Prices-to-Reach-500-a-Barrel-by-2040.html