The US Joint Forces Command has put out a report that predicts surplus oil production will be gone in a couple of years and that by 2015, serious shortages will hit the market:

The US military has warned that surplus oil production capacity could disappear within two years and there could be serious shortages by 2015 with a significant economic and political impact.

The energy crisis outlined in a Joint Operating Environment report from the US Joint Forces Command, comes as the price of petrol in Britain reaches record levels and the cost of crude is predicted to soon top $100 a barrel.

"By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 million barrels per day," says the report, which has a foreword by a senior commander, General James N Mattis.

It adds: "While it is difficult to predict precisely what economic, political, and strategic effects such a shortfall might produce, it surely would reduce the prospects for growth in both the developing and developed worlds. Such an economic slowdown would exacerbate other unresolved tensions, push fragile and failing states further down the path toward collapse, and perhaps have serious economic impact on both China and India."

The US military says its views cannot be taken as US government policy but admits they are meant to provide the Joint Forces with "an intellectual foundation upon which we will construct the concept to guide out future force developments."

Peak oil is based on the notion that world energy exploration will fail to solve the crisis and that we are all doomed to a future of scarcity. If history hasn't been replete with examples of doomsayers being laughably wrong (the Club of Rome in the 1970's predicted we'd run out of oil by 2000), I might be inclined to be more alarmed about this report.

But the essence of the free market is that once a commodity becomes more valuable, ways are rapidly invented to find more of it. And commodities that become prohibitively expensive are generally substituted for when alternatives become economically practical - or ways are discovered to use the commodity more efficiently.

Such shortages might mean we will experience the greatest spurt of entrepreneurial and inventive activity in decades of energy production - if the government is smart enough to get out of the way.

But when it comes to the Obama administration, "smart" and "economy" are mutually exclusive terms.