The world's capacity to meet projected future oil demand is at a tipping point, according to research by the Smith School of Enterprise and the Environment at Oxford University.

There is a need to accelerate the development of alternative energy fuel resources in order to ensure energy security and reduce emissions, says a paper just published in the journal Energy Policy.

The age of cheap oil has now ended as demand starts to outstrip supply as we head towards the middle of the decade, says the report. It goes on to suggest that the current oil reserve estimates should be downgraded from between 1150-1350 billion barrels to between 850-900 billion barrels, based on recent research. But how can potential oil shortages be mitigated?

Dr Oliver Inderwildi, Head of the Low Carbon Mobility centre at the Smith School, said: 'The common belief that alternative fuels such as biofuels could mitigate oil supply shortages and eventually replace fossil fuels is pie in the sky. There is not sufficient land to cater for both food and fuel demand. Instead of relying on those silver bullet solutions, we have to make better use of the remaining resources by improving energy efficiency. Alternatives such as a hydrogen economy and electric transportation are not mature and will only play a major role in the medium to long term.'

Nick Owen, from the Smith School of Enterprise and the Environment, added: 'Significant oil supply challenges will be compounded in the near future by rising demand and strengthening environmental policy. Mitigating the oil crunch without using lower grade resources such as tar sands is the key to maintaining energy stability and a low carbon future.'

The Smith School paper also highlights that in the past, political and financial objectives have led to misreporting of oil reserves, which has led to contradictory estimates of oil reserve data available in the public domain.

Sir David King, Director of the Smith School, commented: 'We have to face up to a future of oil uncertainty much like the global economic uncertainty we have faced during the past two years. This challenge will have a longer term effect on our economies unless swift action is taken by governments and business. We all recognise that oil is a finite resource. We need to look at other low carbon alternatives and make the necessary funding available for research, development and deployment today if we are to mitigate the tipping point.'

The report also raises the worrying issue that additional demand for oil could be met by non-conventional methods, such as the extraction of oil from Canada's tar sands. However, these methods have a far higher carbon output than conventional drilling, and have been described as having a double impact on emissions owing to the emissions produced during extraction as well as during usage.