A whistleblower at the International Energy Agency has accused the organization of deliberately underplaying the seriousness of a looming oil shortage.

The whistleblower, identified by the Guardian newspaper in the U.K. only as a senior IEA employee, told the paper the world is much closer to running out of oil than official estimates admit but that the agency has toned down its warning to avoid triggering panic buying.

A senior official with the International Energy Agency is accusing the group of downplaying a looming shortage of oil. (CBC)

The official claimed the agency is responding to U.S. pressure to downplay how fast existing oilfields are being depleted while overplaying the chances of finding new reserves.

Both the unnamed current employee and a former staff member quoted by the Guardian raise concerns about the ability of the world to increase oil output. The IEA predicted in its latest report that demand will increase to 105 million barrels a day by 2030 and that the world's energy resources are "adequate to meet the projected demand increase through to 2030 and well beyond."

The two dissenters question whether production can be raised from its current level of 83 million barrels a day. Even in the oil industry, there are those who say world production has already reached its peak.

One of them, Matt Simmons of Simmons & Co. International, told CBC News he agrees. Simmons is the author of Twilight in the Desert:The Coming Saudi Oil Shock and the World Economy, in which he argued that Middle East reserves have been overstated.

Simmons said it's impossible for the world to meet expected demand, and once India and China return to normal growth rates they "will drain up every scrap of oil we'll ever be able to produce."

Predicts the end of globalization

He predicted the world will be forced into conservation measures including a reversal of globalization, and changes will include curtailing long-distance commuting, growing food near where it's consumed, and carrying goods by truck only where ship or rail transport cannot reach.

Even that, he said, will reduce consumption by at most 25 per cent over the next 10 years, and this means the world will have to find a substitute for transportation fuel.

Simmons predicts it won't be high prices that kill demand for oil but the industry's heavy use of water, which will become so scarce worldwide that it will be priced like other commodities.

The Guardian report came as the IEA released its annual World Energy Outlook on Tuesday, warning that the worldwide financial crisis has led to a dangerous drop in energy investment, which could stifle any hope of economic recovery.

The agency is a policy adviser to 28 mostly industrialized, oil-consuming nations. It estimates investment in finding oil and gas has dropped by $90 billion US this year, down 19 per cent from 2008. As a result, the IEA said, future supplies of oil and electricity could be constrained and "undermine the sustainability of the economic recovery."

Natural gas glut seen to 2015

The IEA's prediction about natural gas, which represents two-thirds of the activity in Canada's energy industry, also has potentially serious consequences. The agency expects new supplies of natural gas from previously untapped shale formations will create a glut that will extend until 2015.

However, Simmons dismisses the idea that shale gas will create a sustained glut as the "single biggest illusion in the industry in the last 40 years," saying it overestimates by 20 to 25 years how long shale gas wells will be able to keep producing .

The IEA report came a month ahead of the UN Copenhagen conference, where world leaders will discuss measures to reduce carbon dioxide emissions. Among the agenda items is an initiative for developing countries to switch from fossil fuels to renewable energy such as wind and solar.

The IEA report said investment in renewable energy sources has been hard hit, falling by a fifth this year compared with 2008.

With files from The Associated Press