Updated: Is the sun setting on oil supplies?

There is a "significant risk" that global oil supplies could peak within the next decade, according to a major new report which warns that increased oil price volatility and dwindling supplies will impact businesses far sooner than officially suggested.

The study, from the UK Energy Research Centre (UKERC), bills itself as the first independent analysis of the risk of so-called "peak oil" and concludes that supplies are likely to peak before 2030 – with a real chance they could peak by 2020.

It also warns that the UK government is not alone in being unprepared for this scenario, which would result in rising oil prices and increased price volatility.

"In our view, forecasts which delay a peak in conventional oil production until after 2030 are at best optimistic and at worst implausible," said the report's chief author Steve Sorrell. "And given the world's overwhelming dependence upon oil and the time required to develop alternatives, 2030 isn't far away."

The report downplays the implications of recent big oil discoveries, such as those announced in the Gulf of Mexico, arguing that with oil demand currently running at 80 million barrels a day even big finds would only delay a peak in supplies by a few days or weeks.

The report also accepts oil industry claims that significant oil resources remain, but warns that these reserves tend to be in smaller, less accessible fields that can only be exploited at high cost, adding that production from many existing fields is declining faster than anticipated.

Sorrell resisted calls to set a precise date for when supplies will peak, but said it was inevitable that businesses will face increased price volatility over the next 20 years. "It makes no sense to provide precise forecasts of when a peak in oil production will occur," he said.

"The data is unreliable, there are multiple factors to consider and a "bumpy plateau" seems more likely than a sharp peak. But we can say that the window is narrowing rapidly."

He also warned that the "effects of global oil depletion will depend greatly on the response from governments and on the scale of investment in new energy technologies". In addition, he noted that unless investment increases in low-carbon technologies, oil firms will attempt to compensate for falling oil supplies by exploiting carbon-intensive unconventional fossil fuels such as oil from tar sands or coal-to-liquid technologies.

A spokeswoman for the Department of Energy and Climate Change said that government officials had met with UKERC in the summer to discuss the report and would assess their conclusions closely.

She added that the government took the issue of oil supplies seriously and already had measures in place to reduce demand through its low carbon strategy. that the government's low-carbon strategy would serve to reduce the UK's exposure to any fall in oil supplies.

"We are already well aware of the significant challenges for investment in future oil production and that there is a role for Governments to play in reducing demand for fossil fuels," she said. "Already, our climate change, energy efficiency and energy security policies outlined in the UK low carbon transition plan are not only reducing the UK's carbon emissions, but are consistent with the need to reduce our use of fossil fuels."

However, Jeremy Leggett, executive chairman of Solarcentury and a renowned expert on peak oil, said the government had a responsibility to develop a more detailed strategy for coping with dwindling oil supplies. "This latest expression of concern about a premature peak in oil production is from the premier UK energy research institute," he observed. "The UK government has ignored the warnings of the UK Industry Taskforce on Peak Oil and Energy Security. Can it ignore this one too?"

Peak oil remains a contentious issue with some experts arguing that oil supplies have already peaked and energy firms and oil rich government maintaining there are adequate supplies for decades to come. Assessing the validity of either position is made difficult by the reluctance of oil firms and governments to disclose commercially sensitive data on the size of their reserves.

However, there is a growing body of thought that oil supplies will peak far earlier than expected with a number of influential experts warning that supplies are less secure than officially suggested.

Earlier this year, Dr Fatih Birol, chief economist at the International Energy Agency, said that rates of production were falling far faster than official estimates and that he expected global supplies to peak within the next decade.