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The credit crunch of 2008 foreshadowed major economic, political and social upheaval. The next five to ten years will see us face another crunch - the oil crunch.
This time, we do have the chance to prepare. The challenge is to use that time well.
As we reach maximum oil extraction rates, the era of cheap oil is behind us. Virtually every sector of our economy is still dependent on oil. This is why it is vital that whichever party forms the next government, they have a coherent set of policies to help the UK adapt. This is especially important for the UK, and other developed economies, which have been so reliant on low-cost oil for decades.
There are two challenges for government and policy-makers. Firstly, to recognise the situation we face, and secondly to take action to mitigate the worst implications of the crunch. Unless we do so, we face a situation during the term of the next government where fuel price unrest could lead to shortages in consumer products and the UK’s energy security will be significantly compromised. This has the potential to hit UK business and commerce as well as the most disadvantaged in society with yet another crisis.
Our message to government and businesses is clear. Act now. If we don’t, we run the risk of a return to the oil price shocks of the 1970s and 2008 with all the inherent uncertainty and trauma that brought.