The world is hurtling head-long towards an energy crisis so severe that major economies will be under threat of collapse and the resulting tensions could spark a global war in the next decade.

The graphic warning comes from Matthew Simmons, a self-taught energy industry expert and the chairman of of an energy investment bank, who believes the world has already reached peak sustainable oil production.

His theory of "peak oil", outlined in his best-selling book "Twighlight in the Desert", predicts that the industry will not be able to raise output to meet the massive surge in demand that global economic development will create in the coming years. Indeed, his research found that the major oil fields of the Middle East are mostly more than 50 years old and are close to expiring.

He expects dwindling supply in the face of rising demand to send oil prices to unprecedented highs - indeed two years ago he predicted that oil prices would reach $200 a barrel (in 2005 dollars) by 2010. Some ridiculed Mr. Simmons at the time, but with the price of crude reaching $98 on the world oil markets yesterday, following a period of sharp price rises, his critics may be preparing to munch on a large portion of humble pie.

Also yesterday, the International Energy Agency (IEA) predicted that the world's energy demands would be more than 50 percent higher in 2030 than they are today, with China and India accounting for most of the increase. The IEA also warned that an "abrupt escalation" in oil prices is possible before 2015 amid increased demand and shorter supply as oil output becomes more concentrated in a few Middle Eastern countries.

Mr. Simmons, in Bermuda this week to speak at the Bermuda Institute of Ocean Sciences (BIOS) tomorrow evening, has been speaking out for some 15 years on the subject of peak oil. He is passionate in his belief that we should be moving fast towards a less energy-intensive global economy - or face dire consequences within a few years.

George W. Bush has been paying close attention to Mr. Simmons' observations since his first presidential election campaign in 2000. But Mr. Simmons plays down the frequent description of him as an adviser to the White House.

"We have some really serious problems and now they're right in our front room," Mr. Simmons said this week. "The problem is not that we're running out of oil. The problem is that we're now using 85 million barrels of oil per day. What's peaking is our ability to supply that.

"That's why the people who best understand this are so concerned that we're all worried about the wrong issues. I don't know how serious global warming is, but I don't think anybody's suggesting that in the next 10 years Bermuda's going to be underwater. But in the next five years we might be in World War III in a desperate fight for who gets the incremental barrel of oil so their economies don't collapse.

"For the life of me, I don't understand why it's so difficult to get intelligent people focused on how real peak oil is. The data's not easy to get your hands on, but there's a ton of it."

Mr. Simmons says he's been called "every name in the book" by those who oppose his views, including "contrarian", "oil bull" and "petro-pessimist". But the chairman of Simmons & Company International, a global energy investment banking firm, is adamant that his analysis of the situation, based on years of personal research, is right.

The Harvard Business School graduate got involved in the energy industry "by accident" when he was raising venture capital for one of the pioneers of deep sea oil exploration. After the oil crisis of 1973, he relocated from Boston to Houston and set up an investment bank specialising in energy investment. Simmons & Company has completed approximately 694 investment banking projects for its world-wide energy clients at a combined dollar value in excess of $101 billion.

"I though I'd better find out what this industry is all about," Mr. Simmons said. "So I've been a relentless student for the past 40 years on what energy is all about. And the more I got into it, the more I realised that energy is what makes the world work."

Even at $100 a barrel, Mr. Simmons believes oil is cheap. "In the US, gasoline is about $3.20 a gallon, or about 20 cents a cup. With a cup of gasoline, you can take a large sedan, with six people in it, load it up with luggage and put your air conditioning on and you can travel two miles. It's the cheapest thing we have in the world.

"The biggest mistake of the 20th century was believing we had abundant energy that was free. And the average price of oil for the last hundred years has been two cents a cup. We used up all of the high-quality oil left in the world that could easily be processed into diesel or gasoline. What we're left with is a bunch of gunky oil."

There are indeed huge untapped reserves of "heavy oil", for example in the oil sands of Alberta, Canada. The mixture of sand, or clay, heavy oil and water is far more expensive to extract than oil from wells, which is more fluid and can be sucked from below the ground. It has been claimed that Alberta's oil reserves are greater than those of Saudi Arabia.

"That is like saying there are more minnows in the Great Sound than there are tuna in the Atlantic," Mr. Simmons said, making it clear that the Canadian oil sands could not generate the kind of flow needed to avoid future shortfalls. And it would be very costly, he added. "Our research team in Houston put out a piece recently saying that the break-even cost of producing heavy oil in Canada is $100 a barrel."

Less energy-intensive economies are needed and Bermuda could offer others lessons in that regard. "Bermuda is a phenomenal laboratory for an energy unintensive economy," Mr. Simmons said. "I started coming to Bermuda in the 60s and it always amazed me that you couldn't rent a car, you couldn't own a car over a certain size, you only had one car per household. Everything here arrives by boat. Transporting goods by water is the least energy-intensive method of transport. So it turns out that Bermuda is a little Silicon Valley for how the world can become less energy intensive.

"What the US has created was all based on the belief that the Middle East had unlimited reserves of oil. The proudest achievement of my life was doing the research that finally pulled back the curtain on the biggest myth of all about energy. The Middle East never had unlimited amounts of oil.There are 38 oilfields of any size and they're all very mature. They're all in decline.

Mr. Simmons' lecture will be held tomorrow on the BIOS campus in Hanson Hall, Ferry Reach, St. George's, starting at 6.30 p.m., with a question and answer session to follow ($20 for members and $30 for non-members). For reservations, contact vanessa.shortobios.edu or call 297-1880, extension 204.