The UK faces an oil price squeeze that could cause grave damage to the economy unless there is a switch to alternative, greener energy soon, say business leaders. The International Energy Agency lifted its oil price and demand forecasts today to reflect growing demand from emerging economies such as China and India. But the forecast upgrade is only a modest 120,000 barrels per day to 1.6 million barrels per day. That would be a 1.8% increase on 2009 levels. The IEA said the small increase reflects increasing evidence that the recovery in Western countries is not leading to a rise in demand for oil. 'Since we first released detailed 2010 projections back in July, the outlook for OECD economic growth has improved from around zero to 2.1%. But over the same period, expected OECD demand has barely changed,' according to the latest report. The authors point out even the recent record US and European winter snows look unlikely to revive OECD demand – which remains flat at best in 2010. All that adds further weight to the view that this will be an ‘oil-less’ recovery. 'This should come as little surprise: A diminishing number of OECD countries use oil for heating, power or industrial processes, and competition from cheap spot natural gas will likely further cap discretionary use this year,' Changes in the car, aviation and power generation means a greater focus on cleaner, more efficient technologies.

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