TWENTY YEARS ago when oil was cheap, kerosene began to replace firewood in the Third World. One could hardly visit a tea shop in India without finding woven cotton stove wicks on sale next to the biscuits, 5-paisa candy and Charminar cigarettes. In home after home the flickering blue flames of cheap kerosene stoves meant an end to choking, smoke-filled courtyards and kitchens. In India, Turkey, Morocco, China, Nicaragua and Haiti, bushes and trees began to revegetate eroded hills and plains.

But that changed once the oil shocks began after the 1973 Arab-Israeli war.

As oil prices soared to a peak of $40 during the Iraq-Iran war, kerosene, which is refined from petroleum, followed the price rise, sending hundreds of millions of people around the world back to burning wood. Wood sellers hauling towering loads of bundles of twigs again began to appear among the villages surrounding Calcutta and Peshawar, Bangkok and Port au Prince, Katmandu and Cairo.

The world use of wood for fuel has increased by 35 percent from 1976-1986, according to the World Resources Institute. By 1987, 2.5 billion people, half the world's population, were cooking and heating with wood. Their daily energy use equaled the 21 million barrels of oil pumped daily by the Organization of Petroleum Exporting Countries, according to the World Bank.

With Iraq's invasion of Kuwait, what was a regression from a modern technology now is about to become a rout towards devastation of the environment. The sharp rise in oil prices threatens to send hundreds of millions more people scouring the plains and hills for any available scrap of wood, straw and dung to burn.

In 1979, after the second, sharper oil shock, in Costa Rica "a lot of people went to fuelwood even though they already had electric stoves," said Carlos Quesada, former director of the Biomass Users Network, a consortium founded in 1985 by 46 Third World nations. "Now I expect the impact to be even greater -- there is less wood and more people. And there is higher inflation and higher debt," which makes it harder to pay for petroleum imports.

We are already in the midst of the most disastrous period of forest loss in recorded history. Over 370 million acres, an area double the size of France, are expected to be cut down in the 1990s, mostly to clear land for agriculture. Now the gulf crisis dooms millions more trees to be chopped up for firewood.

"No one needs to waste money to do research and document this -- there is no question that this escalation is going to worsen the environmental situation," said Al Binger, a scientist with the Biomass Users Network.

While most of the 40 to 50 million acres of tropical forests destroyed each year are burned off to provide fields and pastures to feed growing populations, the second biggest use of wood is as fuel to cook and to heat, more than is cut for lumber and paper.

In industrialized countries such as the United States, only 20 percent of trees go for fuel, the rest to industry, according to the World Wildlife Fund. But that still adds up to 4 percent of America's primary energy use, nearly as much as nuclear power. With corn and sugar cane, which are converted to methanol for use in cars, America's energy will be 10 percent biomass by the next century. Biomass includes all organic materials derived from present photosynthesis such as wood, plants, sugar, wheat, straw and cow dung. Past photosynthesis produced fossil fuels such as oil and coal.

In most of the Third World, usage rates are reversed and wood serves mainly to cook and heat. Over 95 percent of energy comes from biomass, mainly wood, in Nepal, Rwanda, Sudan, Ethiopia and Tanzania, according to a draft Biomass Users Network paper. And in India and China, where dung and straw are widely used as fuel, rising oil prices have meant more reliance on those animal and crop residues, although they are already needed to fertilize soil and halt erosion.

Unless drastic changes take place in world financial structures to allow such nations low-cost petroleum products, or significant energy-saving technologies are introduced such as efficient stoves, boilers or gasification plants, the environmental damage caused by dependence on wood fuels could lead to ecological disaster.

Even today, Haiti's nearly barren hillsides are ripped clean of their last roots and gnarled trees -- Haitians have been reduced to burning their mango and other fruit trees to produce charcoal, a smoke-free fuel favored by better-off city dwellers. As Binger points out, however, 80 percent of wood's energy is wasted in charcoal production.

The introduction of such cheap alternatives as kerosene and bottled gas had promised to ease deforestation that has turned Haiti and parts of Asia's Himalayas into barren, brown slopes prone to landslides, erosion, flash-flooding and ecological disaster.

In Thailand, for example, scientists and villagers believe that deforestation has led to a reduction in rainfall, perhaps because forests no longer provide enough moisture to cause rain to precipitate from clouds -- the "wick effect." When rain does fall, it shoots down the denuded hillsides, carrying away topsoil nutrients and silting up river beds and dams, destroying their ability to prevent floods and store water for electricity. In 1988, all logging was banned in Thailand after hundreds died in mudslides.

The 1.7 billion cubic meters of wood going up in smoke each year also adds greatly to the atmospheric carbon dioxide believed to cause global warming. Ironically, wood and other biomass should be the ideal fuel to burn to halt the greenhouse effect: Plants trap carbon from the air so that when they are burned, they leave carbon levels constant. But the system will work only when plantings equal burnings. The current pattern is to burn much more than is grown. Independent researchers in Africa report that in the 1980s, 29 trees were felled for every one planted. In Latin America the ratio was 10-to-1 and in Asia 5-to-1. The Food and Agriculture Oranization estimates 1.5 billion of the people who rely on fuelwood are overcutting forests. Already 125 million can't find enough wood or can't afford to buy it. Fuelwood shortages exist in Sudan, Ethiopia, Somalia, India, Pakistan, Bangladesh, Central America and parts of South America. By the end of the decade, more than 2.8 billion people could be short of fuelwood.

According to a recent study, biomass burning is also a major source of methyl chloride, which adds to the chlorine that is destroying the protective ozone layer in the upper atmosphere. On Nov. 13, the Institute for Energy and Environmental Research released a study warning that methyl chloride in the smoke from burning forests and other biomass accounts for 5 percent of all chlorine produced by human activity and 26 percent of chlorine emitted in the Third World. The study said that to protect the ozone layer, Amazon forest burning should be halted by 1995 and other biomass burning be cut by 50 percent over the next 15 to 20 years.

Rising oil prices have also hit industry in the Third World: Tobacco and tea companies have recently switched from coal to wood to dry produce, according to a report on Malawi by the Southern Africa Development Coordination Conference.

Binger says the rising cost of oil, while adding to deforestation, may have the beneficial side effect of forcing a return to the environmental policies of the Jimmy Carter years. He mentioned a Jamaican system of producing alcohol fuels from cheap sugar surpluses. In Brazil too, following policies introduced in the mid 1970s, 4 million vehicles run on pure ethanol made from sugar cane, while 9 million more burn gasoline mixed with 20 percent ethanol.

Another hope is to improve the efficiency of biomass burning. Just try to cook over a wood fire and you'll see how much heat is wasted. Kerosene and gas stoves, however, focus heat directly to the pot with much less waste. So the Biomass Users Network is working to develop enclosed, efficient wood stoves of pottery or metal to replace the open fire. Also being studied are burning wood inside boilers to produce electricity for cooking, and gasification, already widely used in India and China, to convert dung and other organic material into cooking gas.

For hundreds of millions of people in lands stripped barren years ago, shifting back to wood will mean lowered living standards for people whose lifespans are now only 45 or 50 years. For the rest of the world, it will mean acceleration of the trends already threatening the global environment.

Ben Barber is a Washington journalist. He covered Southeast Asia for several newspapers in recent years and was a Gannett Fellow in Asian studies for jornalists, 1986-7.