Leaked German report argues peak oil is happening now

A leaked report prepared for the German government has warned that global oil supplies could peak as early as this year, triggering widespread market failures and a shift in the balance of world power.

The report, which was obtained by the German newspaper Spiegel, was produced by analysts at the military think tank Bundeswehr Transformation Centre and warns that the peaking of oil supplies will result in numerous global challenges.

It predicts global oil supply could peak this year, resulting in decades of political and economic upheaval and warns that over the next 15 to 30 years, oil could become a decisive factor in the distribution of power, with oil exporters gaining increasing influence over countries dependent on oil imports.

Strikingly, the report suggests the German government will need to develop a more flexible approach to Russian foreign policy and might also need to realign its allegiance between Israel and Palestine in order to curry favour with Arab oil exporters.

The think tank also predicts that price shocks will impact a wide range of industries because the vast majority of industrial goods rely on oil either directly or indirectly for their production. It warns that ultimately peak oil could result in partial or complete market failures for many industries.

The report is the latest in a series of studies warning that official oil reserve figures have been inflated and as a result oil demand is likely to outstrip supply within the next decade.

A group of British firms have formed an alliance to lobby the government to properly address peak oil risks, warning that dwindling oil supplies pose a serious threat to the global economy.

In related news, the United Nations Food and Agriculture Organisation (FAO) has announced that will hold a special meeting later this month amid similar concerns that global demand for some food stuffs is outstripping supply.

The meeting, slated for 24 September at FAO's Rome headquarters, will convene experts and government representatives to examine ways the UN could play its part in easing the current turmoil in grain markets.

Wheat prices experienced their biggest monthly rise in almost a year in August, according to the FAO's Food Price Index, climbing by five per cent following persistent drought in Russia that prompted the country to extend a ban on wheat exports into 2011. Higher sugar and oilseed prices were also recorded, leading to an overall spike in food prices.

Rising food prices were blamed for deadly protests in Mozambique last week, amid growing concerns that the country is facing a repeat of the food crisis in 2007-08.