America is mired in recession. Europe is in turmoil. Banks are reducing lending. Families are selling their extra vehicles. Yet, the price of oil is up. This strange dichotomy is an overlooked warning sign that America would do well to heed.

Last Wednesday, President Barack Obama cleared the way for deep-water oil drilling along thousands of miles of America’s eastern seaboard and parts of Alaska. The announcement reversed his election promise, in which he said drilling would “only worsen our addiction to oil and put off needed investments in clean, renewable energy.”

Why the change of heart?

Since coming to office, Mr. Obama has been confronted with an uncomfortable truth. It is a truth that was highlighted in his speech given at Andrew’s Air Force Base on March 31.

Standing next to an F/A-18 Super Hornet modified to run off a 50/50 biofuel blend, the president announced that the new Navy fighter jet, called the Green Hornet, will be flown for the first time in just a few weeks. If successful, it will be the first plane ever to break the sound barrier while powered by a fuel that is half biomass.

According to the president, the Pentagon isn’t seeking “homegrown” alternative fuels just to protect the environment, but to “protect America’s national security.” The Navy is embarking on a radical plan to reduce its dependency on oil. In 10 years, it wants to be able to power all its planes, vehicles and ships using a 50 percent alternative fuel.

The Navy isn’t alone. The Army too is developing combat vehicles designed to run on fuels like biodiesel and ethanol. The Defense Department has invested $2.7 billion this year alone to improve energy efficiency, reported President Obama. “[H]ere at home, as politicians in Washington debate endlessly whether to act [to reduce our oil dependency], our own military has determined that we can’t afford not to,” he said.

What is the uncomfortable realization facing the president? It is the fact that, going forward, it is going to become dramatically more difficult for America to obtain and secure the energy it needs—and sooner than most people realize. It is a truth that policy makers and politicians are afraid to publicly admit because the implications of an oil-constrained world affect everything from stock markets and food production to the dollar’s status as the world’s reserve currency.

In short, over the next several years, global oil dynamics may change the planet forever. And America will not be immune.

The United States imports a whopping 56 percent of its daily oil needs—over 10.9 million barrels per day. That is more than the total daily production of Saudi Arabia. But even this number underestimates America’s vulnerability to oil shock. That is because America imports close to one fifth of the world’s available oil.

And this dependence on foreign oil supplies is set to get worse. America’s oil fields are rapidly going dry.

No country has spent more money on oil exploration and production than the U.S. Nor has any country drilled as many holes looking for oil. Yet, despite record dollars spent and unlimited access to the best, most advanced technology available, America’s oil production is in relentless decline. It is a decline that has continued for 40 years—despite discoveries in the Gulf of Mexico, the Bakken formation, the Rocky Mountains, and Alaska.

These are uncontroversial facts grounded in geology.

Here are some other facts grounded in geology. On March 25 the U.S. Department of Energy revealed that “a chance exists” that the world could experience a decline of liquid fuels production between 2011 and 2015 “if the investment is not there.”

Although the Department of Energy (DoE) officially dismisses “peak oil” theory, which predicts that new crude oil production will soon be unable to keep up with depletion from the many hundreds of thousands of old wells with falling production, its own data actually backs up the peak oil theory.

In April 2009, in a document titled “Meeting the World’s Demand for Liquid Fuels,” the DoE published figures summarizing global liquid fossil fuel production and revealed some startling facts. Page 9 of the report shows that the DoE expects total world fossil fuel production to steadily increase through 2030. But here is where the report borders on ridiculous. The DoE admits it has no idea where the extra oil production will come from.

After tabulating all the known and announced oil discoveries, the DoE found that the cumulative production from existing and known oil fields and discoveries will enter a slow persistent decline beginning in 2012.

According to the DoE data, “unidentified” additional liquid fuel projects will have to fill a 10 million-barrel-per-day gap between supply and demand within five years. Ten million barrels per day is almost the equivalent of the daily oil production of Saudi Arabia—the world’s top oil producer.

So much new oil production may be wishful thinking.

Production from the world’s 500 giant fields (fields containing more than 500 million barrels of oil) is declining. These fields produce approximately 60 percent of conventional oil. Production from the top 20 fields is declining too. Many of these fields are over 50 years old and few new giant oil fields have been discovered in recent years. These are facts.

So where is the oil going to come from?

Once an oil field reaches max production, it goes into decline. New technology has in some cases helped slow the decline rates, but not reverse them. That is what experience shows. This is the experience with Texas and the North Sea—two areas that have had massive amounts of money, virtually unlimited access, and the best technology poured into them to get the oil out. Both of these fields are fractions of their former selves. And if you don’t think Texas and the North Sea were major oil fields—one out of every 11 barrels of oil the world has produced has come from just these two fields!

According to recent research from Oxford University, the world’s oil reserves may have been “exaggerated by one third” because opec countries over-reported their reserves in the 1980s when competing for global market share. According to the report’s author, Sir David King, the world could be in for a shock, beginning around 2014. He said he was “very concerned” that Western governments were not taking the data showing demand outstripping supply more seriously, especially when China is putting so much effort and money into grabbing as many energy resources as possible.

These are statistics that America and the world are not ready for.

Even if Exxon Mobil, Chevron, Conoco Philips and every other U.S. oil company that wanted it, was given immediate, unlimited access to America’s eastern seaboard and Alaska, it would take a decade for any meaningful quantities of oil to begin flowing—and that is assuming there are meaningful quantities of oil located there in the first place.

It would take similar herculean effort to tap the new preliminary discoveries off the coast of Brazil. Canada’s tar sands? They might help a bit, but they too are difficult and costly to mine—not to mention extremely disruptive to the environment.

So where is the oil going to come from?

On March 31, crude oil surged to a new 17-month high. At $83 per barrel it is a far cry from its highs of around $147—it took a global recession to knock it down that far. But the really scary thing is that despite the severe economic downturn and reduced demand, oil is still far above the $10 per barrel it was trading at just over a decade ago.

Sky-high oil prices may soon be an uncomfortable and permanent fact that America and the world will be forced to deal with—the results will not be pretty.

For implications of the looming oil crunch, read “The Battleground” and “Stoking the Engines of Empires.”