THE geopolitics of oil shapes the world. What was true in the last century will be more so in this one. Oil security preoccupies the White House. Witness George W Bush's mission to bring democracy to the Middle East and the build-up of a strong military presence off the west coast of Africa, under which there are 66 billion barrels.

China, meanwhile, is busy forging closing ties with the Middle East and Canada, where it has reached agreement on access to the Alberta tar sands. In Latin America, China is investing $100 billion in a series of energy deals, including a $400 million investment in Venezuela's oil and gas industry, strengthening the hand of president Hugo Chavez.

Germany already imports 35 per cent of its oil and 40 per cent of its gas from Russia, more than any western European country. As fossil fuel reserves dry out in Europe, experts expect German imports to reach 60 to 70 per cent by 2020. There is deep unease in European capi tals, worried about the power now held by Russian President Putin.

Oil provides 40 per cent of the world's energy, or 80 million barrels each day. Rising energy consumption means this will top 140 million in 30 years' time. Environmental disaster beckons unless energy is minimised and conserved. But in our throwaway world there are few measures aimed at conservation.

The US Geological Survey says that the world was endowed with 3,021 trillion barrels of oil before production began. And that is just conventional light crude. It believes we have used up just over 1,000 billion barrels. If the world continues to consume at its pre sent rate, we get to the half- way point of the 3,021 billion total in 2036.

There are 1 trillion barrels of proven oil reserves left, according to Opec, the producers' cartel. Even at the current level of global consumption that should last 40 years, but world demand is rising inexorably as the economies of China and India surge. The world consumes 24 billion barrels each year but only finds 10 billion in new reserves. Saudi Arabia has a quarter of the world's proven reserves. But doubts within the oil industry are starting to emerge about how reliable the Saudis' forecasts are.

Texan energy banker Matthew Simmons says: 'Until an independent third party conducts an independent reserve audit, the whole world would be wise to cast doubt on the quality and reliability of these numbers.'

The Association for the Study of Peak Oil sees annual Middle Eastern production peaking at 30 billion barrels in just five years' time before plunging to 12 billion by 2050. The Saudi oil minister Ali al-Naimi said earlier this year: 'When I state that our reserves are 261 billion I have a very high degree of confidence that that estimate is a good one.'

Whatever the truth, we are in the era of high oil prices, and there are fears that another ghost of the Seventies will come back to haunt us: inflation. What that will do to nations' economies and plans to adopt conservation and environmentally friendly policies is anyone's guess.

Natural gas accounts for 38 per cent of Britain's electricity but is expected to become even more important in coming years. The UK's own North Sea supplies are diminishing but our reliance is growing. There are currently enhancements to a giant pipeline taking gas between Norfolk and Zeebrugge in Belgium.The UK and most of Europe will increase imports from Gulf nations, Chechenya, Georgia, Ingushetia and Algeria.

Improved technologies to make liquefied natural gas, which can be frozen and distributed via giant tankers anywhere in the world, will transform the ability of gas-producing countries to reach new markets. This will broaden the geopolitical horizons of Russia, in particular, which has plentiful supplies.

Britain's coal-fired power stations produce a third of our electricity but they are more than 30 years old. In the United States, coal already fires more than half the power stations and reliance on coal there is increasing for the first time in decades. The US Department of Energy estimates that 92 new plants are proposed across the country, representing 59,000MW of potential electricity and $69bn of investment.

The US government is keen to find ways of weaning itself off oil and gas supplies from politically unstable regions. It is acutely aware it holds the world's biggest supplies of coal and predicts that coal's contribution to global energy consumption will double to 50 per cent by 2015 as developing countries, particularly China and India, increase production. The rapid rise in iron ore and coking coal prices in the past year has unleashed a flurry of expansion projects to meet future demand from the steel industry.

It sounds like burying the problem under the carpet, but carbon storage might just dramatically reduce the problem of greenhouse gas emissions. Earlier this month, Energy Minister Malcolm Wicks unveiled a new plan that the government believes could strip out carbon dioxide from power stations and pump it into depleted North Sea oil fields. CO2 emissions from UK power plants have risen in recent years as Britain has shifted to oil. BP, in particular, believes carbon capture and storage will be key in the battle against global warming.

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