Something potentially ominous occurred last year. Supply and demand for the world’s most strategic commodity collided head on.

The world consumed more oil than it produced. Full stop.

The world has experienced oil shocks before, but this looming one is different. During the 1970s, the Arabs temporarily turned off the taps to increase the price and blackmail the West. As a result, the global economy took a nosedive. But today, the situation could be orders of magnitude more dangerous because supply limitations are not purely geopolitical in nature—or temporary—but structural.

In June, BP released its “Statistical Review of World Energy.” This report is considered the Holy Grail by many energy investors, since it is one of the most comprehensive energy reports produced.

In short, the report said last year the world again burned more oil than it pumped out of the ground. And that the divergence is widening. The world is now consuming 5 million barrels of oil per day more than it produces. This is clearly unsustainable. Part of the gap was covered by biofuels, like corn ethanol, but that was only able to make up for a small fraction of the shortfall.

To keep the cars running, furnaces burning, trains pulling, supertankers sailing, jets flying, plastics manufacturing, lubricants lubing—and food growing—the world dipped heavily into its above-ground emergency reserves.

But how much longer can the world operate in deficit before someone panics?

The Middle East is less and less reliable as a supplier. With the European invasion of Libya, 1.5 million barrels per day of oil have been taken off the market. In an oil-constrained atmosphere, does anyone expect the oil impoverished Europeans to really end their meddling in Libya, even if Muammar Qadhafi is toppled?

Then there is Iran and Egypt, two countries increasingly hostile to the West, sitting at two of the most strategically important and vulnerable oil choke points in the world. Saudi Arabia is experiencing legitimate threats to its oil supplies with the unrest in Bahrain. What about Africa? Well, who wants to invest in an oil well to have it confiscated by the local warlord? And Russia? Who wants to rely on a nation that in recent years has frozen nations into compliance in the middle of winter? Britain? North Sea oil production is plummeting. Norway? Production plummeting. Mexico? Production plummeting!

The list of reliable suppliers is growing short.

The world is making great leaps in renewable power generation technology—but it is still years, maybe even decades away from being able to meaningfully replace oil. Will it be too late? The hydrogen economy is still a distant dream. Biofuels are equally costly, and most rely on government subsidies. Coal to oil holds promise, but is the world willing to strip mine even more forests? Natural gas could help as well, but trillions in infrastructure would need to be built. And where is all the money for any or all of these alternatives going to come from?

And each day of each month of each year, each and every one of the millions of oil wells around the world produces a little less oil. Yes, new oil is being discovered. But it is becoming increasingly difficult to keep up with falling production from all the old wells.

That’s the other giant piece of news from the BP report: Since 2002, world oil production has basically flatlined. Nine years with virtually no production growth! When you pay $4 per gallon gas despite the worst recession in America since the 1930s, this is why.

Last week, President Obama decided to release 30 million barrels of oil from strategic oil reserves. The New York Times reported that it was an effort to bring down prices at the pump. But it was a useless political move that may actually harm Americans. With almost 5 percent of America’s emergency reserves, President Obama supplied the world with one third of a single day’s worth of oil. And the longer America waits to replace that oil, the harder it will be.

But the world’s oil supply problem is exacerbated by perhaps an equally challenging issue: population growth.

Last Tuesday, the U.S. Census Bureau released its global population report. It highlights just how fast the global population is growing, especially in China, India, Indonesia and Brazil. In less than 10 years, more than 3 billion people will live in these four countries alone—nearly half the world’s current population.

The per capita consumption of virtually everything in these countries—from oil to computers—is a small fraction of what it is in America. But that is changing. These countries are rapidly industrializing—and their demand for the things Americans take for granted is soaring.

Supply and demand are colliding—and the collision will involve a lot more than just oil supplies. Food, rare earth minerals, precious metals, electricity, and water: the potential points of conflict are growing.

In a world of limited resources, cooperation will be needed if nations are to avoid clashes. But what are the odds that the world will break with 6,000 years of history? The greatest threat to the global economy—to the world as a whole—is not oil shortages, or soaring population growth. The biggest threat is what politicians decide to do about it.

The world has become too complacent. Most people think there will never be another Hitler or Stalin. Almost everyone has forgotten Napoleon and Charlemagne. Schools don’t even teach about Justinian or Otto the Great. And who is Bismarck?

A global recession compounded by a shortage of vital resources and coupled with a lack of historical appreciation are exactly the kind of conditions that led to war in the past—think Japan and Germany in 1930.

Will the next decade be characterized by cooperation, or will it be another variation of lebensraum? Read “The Battleground” for the answer.