Today, the world’s energy ‘watchdog’, the International Energy Agency (IEA) published their long awaited annual World Energy Outlook (WEO) for 2008. In stark contrast to bland-to-cornucopian supply commentary in past reports, the initial language in this years Executive Summary is of an urgent nature. This report is a step in the right direction for conveying our rapidly deteriorating energy situation to world policymakers - the IEA should be commended for making the turn and finally acknowledging: costs, investment limitations, new capacity requirements, steep decline rates of existing wells, and externalities (in this case GHGs).

The era of cheap oil is over, the International Energy Agency warned yesterday as it predicted crude values would soon rebound to above $100 a barrel and double again by 2030 as fields in the North Sea and elsewhere in the world declined faster than expected.

More than $26tn (£16tn) of new investment would be needed over the next 20 years to ensure the world had enough energy, according to the IEA, which was founded during the oil crisis of 1973-74 and acts as energy policy adviser to 28 member countries including Britain.

“While market imbalances could temporarily cause prices to fall back, it is becoming increasingly apparent that the era of cheap oil is over,” the organisation stated.

As world oil production has never peaked before, there is no historical basis for making informed judgments as to what is going to happen.

All we know is that some six billion people, living in some 200 economies on this earth are soon going to be confronted with getting by on less than the 86 million barrels of oil per day (b/d) that we currently consume. The outcome of the interaction among all those people, all those countries and all that oil is too complex to foresee with any clarity.

Like it or not, oil fuels the engines of industrialized economies. In California, we burn through nearly 20 billion gallons of the stuff each year just driving around. Then there’s the oil we use to grow and transport food and pump water, the oil that fuels planes, trains and cargo ships, and the oil that is embedded in every computer, every inch of asphalt and every bit of plastic. So imagine my surprise when I learned that oil supplies are running out - and that the federal government is doing nothing to prepare for it.

Brigadier-General James Ellery CBE, the Foreign Office’s Senior Adviser to the Coalition Provisional Authority in Baghdad since 2003, confirmed the critical role of Iraqi oil reserves in potentially alleviating a “world shortage” of conventional oil. The Iraq War has helped to head off what Brigadier Ellery described as “the tide of Easternisation” – a shift in global political and economic power toward China and India, to whom goes “two thirds of the Middle East’s oil.”