THE RECORD-HIGH oil prices posted over the past few days are not a result of low petroleum stocks in the United States, output deficiencies in the Middle East or the deliberations of Opec. Prices are racing to US$60 a barrel because almost everyone now realises something that was readily apparent five decades ago: the world is running out of petroleum, fast. In 1956, a geophysicist at Shell named M. King Hubbert predicted that oil production in the continental United States would peak in 1970 and subsequently fall into irreversible decline. '[It took] 500 million years of geological history to accumulate the present supplies of fossil fuels,' Mr Hubbert noted. 'Industrial exploitation of fossil fuels will progressively exhaust a fixed supply, to which there can be no significant additions.' Using geophysical data and elegant mathematics, he concluded that global production would peak when half of the world's total stored oil supply had been consumed. His findings were ridiculed by most of his peers as the discovery rate of new oil sources comfortably exceeded consumption growth. He was, alas, quite correct. US production reached about six million barrels per day in the 1970s and has been declining ever since. Hubbert's long-term supply estimation methods were quietly accepted by the industry. Even so, prices of oil, iron ore, copper, nickel and other basic industrial inputs plummeted after 1980 and stayed low for two solid decades. The flood of cheap natural resources fuelled an unprecedented economic expansion. By 2000, consumers were buying huge, cheap sport-utility vehicles (SUVs) and filling them with petrol that cost less in real terms than it did in 1970. Supply-side economists argued that scarcity could be abolished through advances in exploration, technology and productivity. Fossil fuels, they said, would last for hundreds of years. But even as oil production surged with the advent of powerful new discovery and extraction technologies, fresh oil discoveries slipped behind consumption growth in the 1980s. The gap between the two now widens every year. And with the astonishing growth in China's oil consumption, the alarm bells are clanging. Energy analyst David Goodstien, author of Out of Gas: The end of the age of oil, envisages 'a dying civilisation, the landscape littered with the rusting hulks of useless SUVs'. The global energy crisis begins, Mr Goodstien contends, not when the last drop of crude oil is extracted, but at the so-called 'Hubbert's peak' - defined as when the total cumulative usage exceeds remaining terrestrial supply. That, most independent analysts agree, will happen for conventionally extracted oil by 2010. Countries that by then have failed to install alternative energy systems - none of which can now produce the same quantity of cheap usable power as fossil fuels - face a painful economic descent from Hubbert's peak. It will be a period, Mr Goodstien warns, characterised by vastly reduced per capita energy consumption, growing poverty and widespread shortages of petroleum-dependent goods including food, plastics, chemicals and fuel. Even oil industry executives are worried. 'Relative to demand, oil is no longer in plentiful supply,' Chevron Texaco chairman and chief executive David O'Reilly warned last month. 'The time when we could count on cheap oil and even cheaper natural gas is clearly ending.' Mr O'Reilly pointed out: 'It took humans 125 years to consume the first trillion barrels of oil, and we'll likely consume the next trillion within just 35.' ExxonMobile estimates conventionally recoverable crude oil supplies at about three trillion barrels. Global oil consumption reached about 82.4 million barrels a day last year, or about 30 billion barrels for the year. The company also points out the world will need to find new sources for a further 100 million barrels a day by 2015 as output at existing fields declines. The 'centre of gravity' for global petroleum markets, according to Mr O'Reilly, is shifting to China, armed with hundreds of billions in liquid currency. China's oil consumption surged by 15 per cent last year to seven million barrels per day, according to Morgan Stanley economist Andy Xie, who forecasts Chinese consumption in 2014 at 14 million barrels per day. China's oil imports would need to double by 2010 to keep pace with projected demand. Ironically, some analysts see a ray of hope in China's ascendancy, especially as the US has all but abandoned attempts to wean itself from fossil fuels. The Worldwatch Institute, a US environment research group established in 1974 by ecologist Lester Brown, says China's combination of authoritarian government and economic dynamism may well prove to be a driving force behind the global adoption of alternative energy systems. 'Oil production may peak within the next 10 years, just as China is still in a very expansive stage,' said Worldwatch president Christopher Flavin. 'It's going to be crunch time and precipitate intense global competition for oil.' But China is well-placed, he argues, to trail-blaze a bumpy but effective transition to alternative sources of energy such as wind, solar photovoltaics, geothermal and bio-fuels, and cleaner, more efficient use of fossil fuels through the use of hydrogen fuel cells.