That is the warning from University of Liverpool expert Simon Snowden, who said the world is heading for a “supply plateau”.

Mr Snowden, who recently addressed the All-Party Parliamentary Group on Peak Oil and Gas, said the accelerating cost of oil marks the approach of a peak in oil production, and demand will soon outstrip supply to the extent where world economies will begin to fail.

In the past 12 months, the price of oil has soared from just above $50 a barrel to hit a record of nearly $139 a barrel over the weekend.

A recent report from Goldman Sachs said the possibility of $150 to $200 a barrel is increasingly likely in the next six to 24 months.

Mr Snowden said: “Unless we completely cut our dependence on oil, we could see years of almost non-existent growth for the UK economy. Any recovery will be short-lived and at ever lower levels.

“The cost of goods will rise even more sharply and the economy could stagnate into a recession for several years.

“We need to invest in alternative forms of energy and transport, but changing our economy in such a fundamental way will take years, so in this sense a recession is inevitable.”

The elderly and the poor, as well as the farming industry, will need to be safeguarded from increasing fuel poverty, he added.

The rising price of oil has been at the centre of discussions at the ongoing G8 Summit in Japan.

On Sunday, energy ministers from the Group of Eight countries, joined by China, India and South Korea, issued a joint statement pledging greater investment in energy efficiency and green technologies to reduce dependence on oil.

Kate Martin

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