There is, of course, a way out, and it lies in recognizing the growing efficacy and efficiency of renewable energy sources, especially solar, wind and geothermal.
The market price of oil has dipped below $50 a barrel - an event that few anticipated. So low is this price collapse, that it is endangering the profitability of the entire oil industry.
The immediate cause of the price collapse is the US-Saudi strategy of interfering in the oil market. The duo is using oil prices to wage economic warfare by sustaining unusually high levels of production.
With the global economy still limping along in the context of weak demand and slow growth, the supply glut has tumbled the market price of oil with the precise aim of undercutting the state revenues of US-Saudi mutual geopolitical rivals, especially Russia, Iran, Syria, and Venezuela.
Despite the apparent low price of oil on international markets, costs of production remain high. Since the peak of cheap, conventional oil around 2005, production has fluctuated on a plateau as the industry has turned increasingly to more expensive, dirtier and difficult-to-extract forms of unconventional oil and gas, especially shale.
That is why as levels of investment in production have dramatically increased in the last decade, the quantity of oil being produced has dramatically declined. As a result, oil companies are finding that the price is too low to cover their production costs, let alone maintain reasonable levels of profit.
Economy held hostage
The global economy, whose health is heavily tied to availability of cheap energy, is now caught between a rock and a hard place. With production costs approaching around $70 a barrel, the lower oil price makes the business models of the industry obsolete.
For this reason, majors like BP and Shell have been forced to cease new investments in production this year, simply to stave off the looming threat of bankruptcy.
But it would be a mistake to assume that the price collapse could continue indefinitely. As the industry cuts back production investments to avoid business failure, the scarcity of supply will eventually hit the forces of demand, pushing oil prices back up.
Higher oil prices might alleviate the strained business models of the industry, but they will also detrimentally impact the economy by ramping up cost of living and increasing the risk of debt defaults across housing, energy, retail and other sectors, as happened in 2008.
Though it has taken most observers by surprise, this new era of volatile, swinging oil prices was predicted - by Dr. Colin Campbell, a former long-time BP geologist who was one of the earliest to warn of the impact of peak conventional oil.
Decades ago he predicted that once cheap, conventional oil production peaks, the shift to dependence on more expensive unconventional energy forms would generate a new type of economy, featuring fluctuating production levels and, in turn, large oil price swings.
This can be quite easily understood: to satisfy demand for oil, supplies must be drawn from all producers, including those producing at $10 or less per barrel, and those producing at $100 or more per barrel. That means that according to the vagaries of supply and demand, the price at any moment can swing wildly between those extremes.
Oil price volatility is, in other words, a direct consequence of the end of the age of cheap oil, and the transition to a new era where cheap oil is scarce, and expensive oil, though abundant, is more difficult and slower to extract, and too costly to permit the levels of economic growth we were used to seeing in the 1980s.
At some point, then, when the US-Saudi economic warfare engine runs out of steam or decides its objectives have been achieved, and as the dearth in investment slashes back supply, prices will have no choice to rebound.
In coming years, these factors could even generate a price spike - this might well provide temporary relief for the industry, but it would also encourage a reassertion of industry expansion into environmentally and politically problematic areas, and would act once again as a brake on economic growth.
There is, of course, a way out, and it lies in recognizing the growing efficacy and efficiency of renewable energy sources, especially solar, wind and geothermal, where combinations of these technologies combined with smart grids and battery storage innovation could meet our needs in more sustainable and less consumeristic communities.
But currently, the US and British governments are leading the way in attempting to use state power to interfere with the meteoric rise and potential of renewable energy markets, instead promoting legislation to defend the interests of traditional fossil fuel and nuclear sources.
The oil industry recognizes the imminent existential threat posed to its business model from renewables. By lobbying states to retain emphasis on fracking while curbing the capacity of communities to transition easily to renewable, the industry hopes that as the cycle of volatile oil prices continues along its swing trajectory, periodically and increasingly disrupting the global economy as it unfolds, it will come out on top.
Persistent slow growth, recession and austerity would accelerate poverty and widen inequality worldwide. But as oil prices creep higher in the long-term with renewable transition efforts dampened through state power, populations would be forced to rely on evermore expensive and volatile fossil fuel energy sources.
Meanwhile, continued flooding of credit into the economy through quantitative easing would keep the financial sector and industry afloat, at the expense of indebted consumers. In this scenario, the higher prices, the industry hopes, would sustain their profitability at the expense of the well-being and economic needs of the vast majority of indebted people on the planet.
The scenario of continued oil industry supremacy is nothing more than a tightening noose around the neck of Planet Earth.
Now, more than ever, the world needs real leadership on our energy future. Unfortunately, that leadership is sorely lacking. Last week, the International Energy Agency (IEA) issued a new report calling for global nuclear energy capacity to be more than doubled by 2050, to meet the world's projected energy needs, while keeping emissions reductions on target for 2 degree Celsius.
Yet this recommendation comes at a time when questions about the costs, competitiveness and safety of nuclear power compared to renewables are mounting. In fact, the pace of nuclear power development in recent years has been unable to keep up with the meteoric exponential growth, and cost reductions, in solar and wind power.
Last year's World Nuclear Industry Status Report found that nuclear's share of world power had fallen to its lowest in 30 years despite new plants coming online, and billion dollar government subsidies and loans.
It appears likely that nuclear power is now in terminal decline, having peaked around 1996 at 18% of global energy production, dropping steadily since then to 11%. Much of the reason is the massive costs of nuclear power, and the long lead-times for installations, compared to the diminishing costs of solar and wind.
Report lead author Mycle Schneider, a Paris-based nuclear energy consultant forecasted the inevitable decline of the nuclear industry in no uncertain terms:
"The nuclear industry, their product is basically a 1,000-megawatt plant, more or less, that takes 10 years to build. In 10 years, this energy world is going to be a radically different one. To propose today that model in a landscape which is small-scale, decentralized, super-efficient defies logic."
So why is the IEA defying logic by proposing nuclear power as a viable solution for the world's energy needs?
This is by no means the first time the IEA has appeared to remain beholden to the outmoded industry mindset of traditional energy utilities. For decades, according to IEA insiders, the agency has buckled under political and industry pressure to suppress conclusions confirming the peak of conventional oil, and its long-lasting economic fallout.
This year, the agency will appoint a new executive director replacing incumbent IEA chief Maria van der Hoeven. Who will fill that role may play a big role in determining the political direction of the global energy sector.
Stooge number one: tar sands emissions 'extremely low'
Created in the 1970s, the IEA's purpose was to provide global leadership and planning for energy contingencies, especially the risk of energy crisis. Yet it has largely failed in this task, as demonstrated by the 2008 economic crash, which was linked to a massive debt crisis, as well as the plateauing of cheap, conventional oil.
At a time of increasing energy volatility, a change in IEA leadership could have ripple effects across the energy world. We need a new director who understands the new energy landscape, and recognizes that clinging onto the outmoded utility model of the conventional fossil fuel and nuclear industries is a recipe for catastrophe.
One of the big names tipped to replace van der Hoeven is Fatih Birol, currently IEA chief economist. But while Birol's candidacy is strong, questions remain about his connections to industry, given that he previously worked in various senior roles at the Organization for Petroleum Exporting Countries (OPEC).
Late last year, under his watch, the IEA forecasted a rise in Canadian tar sands production of 3 million barrels over the next 25 years, but downplayed associated carbon emissions, which Birol described as "extremely low". He went on to urge that policy decisions be made on the basis of "scientific analysis".
Yet the IEA's support for tar sands exploitation is thoroughly devoid of scientific integrity. The greenhouse gas emissions of mining and upgrading tar sands is about 79 kilograms per barrel of oil, but melting out the bitumen in place also requires large inputs of natural gas. This boosts emissions to over 116 kilograms per barrel.
Consequently, as Scientific American reports, "producing and processing tar sands oil results in 14 percent more greenhouse gas emissions than the average oil used in the US."
And as tar sands production is increasingly deploying melting-in-place projects which have larger carbon footprints, emissions are now increasing. "Emissions have doubled since 1990 and will double again by 2020", said Jennifer Grant, director of oil sands research at environmental group Pembina Institute in Canada.
Another potential candidate is Konstantinos Mathioudakis, who was Greece's secretary-general for energy and climate change at the Ministry of Environment, Energy and Climate Change.
Yet while Greece has immense renewable energy potential, especially in solar, it has largely squandered this opportunity due to a combination of abiding by failed IMF-World Bank macro-economic reforms, and disarray in domestic renewable energy policies.
Although during Mathioudakis' tenure, the Greek government did aim for 100% renewable energy by 2050, it failed to move toward this. His connection with a, literally, bankrupt government that paved the way for the rise of the Syriza party, does not evoke confidence.
Shilling for the corporate empire?
There is reportedly a third potential contender, Vicente Lopez Ibor Mayor, who is the former commissioner of Spain's National Energy Commission. Although Mayor denied rumours linking him to the IEA candidacy, credible sources told me that he privately intends to contend, but has not yet formally declared this.
If the rumours transpire to be correct, his candidacy could be intriguing. Mayor is currently chairman Lightsource Renewables, Britain's largest solar energy generator, as well as a founding partner of a global law firm, Estudio Juridico International, specialising in energy. Previously, he was a special advisor to UNESCO's energy program, where he also sat on the Organizing Committee for UNESCO's World Solar Summit.
He went on to serve various roles on energy and infrastructure in the European Commission. This unique combination of industry and government experience, along with his personal and professional support for renewables, stands him out from the competition.
The bad news is that Mayor still parrots the myth of shale gas as a 'clean bridge fuel', and goes so far as to promote the widely criticized TTIP proposal - the Transatlantic Trade and Investment Partnership - as being a positive force for economies and the renewable energy sector.
The fundamental problem with TTIP, a so-called free trade agreement being negotiated in secret by US and European governments, is that by aiming to reduce regulatory barriers to trade for big business, the agreement aims to fundamentally erode the power of elected governments to enact legislation on food safety, environmental protection, banking and finance, that would in some way undermine corporations from rampaging across the US and EU without concern for people or planet.
One of the most obvious counter-democratic components of TTIP is its aim to introduce Investor-State Dispute Settlements (ISDS), which would effectively allow corporations to sue governments if their policies cause a loss of profits.
In his Atlantic Council paper, Mayor advocates the TTIP as a way of shifting "energy's centre of gravity toward the Atlantic Basin" and away from "the traditional energy-exporting world of Central Asia, the Middle East and Russia." He calls for efforts to produce "better public understanding" of the agreement's benefits, when what is needed is more public accountability and transparency for the entire process.
The last thing the world needs is an IEA chief ideologically beholden to the US-UK centred broken economic and energy model, that has accelerated global instability over the last decade.
The poor prospects for the new leadership of the IEA reinforce the idea that solutions to our energy woes will not come from above, but must be pioneered from below, by ordinary people and communities around the world.
Dr. Nafeez Ahmed is an investigative journalist, bestselling author, and international security scholar. He is a regular contributor to The Ecologist where he writes about the geopolitics of interconnected environmental, energy and economic crises. He has also written for the Guardian, The Independent, Sydney Morning Herald, The Age, The Scotsman, Foreign Policy, Prospect, New Statesman, Le Monde diplomatique, among many others. His new novel of the near future is ZERO POINT.