Jeremy Leggett: Another crunch is coming

There is one major similarity between the energy crisis and the financial crisis and one main difference. These two things tell us a lot about the role of cultures in how our modern version of capitalism plays out.

The similarity is that we are dealing with two massive global industries who have their asset assessment systemically, and roundly, wrong. The difference is that few people and organisations warned about the credit crunch as it approached, where as with the oil crunch, a host of people

As for the international energy agency, it is as the World Bank was warning about the credit crunch a few years before it hit. In 2007, I convened an industry task-force on peak oil and energy security in the UK. It is chaired by Virgin, and members include Scottish and Southern energy, Arup, Foster + Partners, Stagecoach and my own company, Solarcentury. We released our first report at the London Stock Exchange last November, and our second will be released in November this year.

The first report concluded that peak oil is a grave risk for the global economy. Specifically, what concerns us is the threat in the premature peak in global oil production caused by either or both of a collective overestimation of reserves by the global oil industry, and an inability to deliver enough flow capacity because of underinvestment. The second report will examine, among other things, the impact of the recession on the global prices.

Independent