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The crude oil price slump has been with us for the best part of two and a half years and, if you believe in charts and cycles, we should be seeing OPEC once again imposing output cuts. Even better for Canadians, it might seem, is the oil-friendly guy in the White House, who talks about laying steel pipes across thousands of miles of North American prairie.

Good for some, perhaps, but not for everyone because the glut is not over. If you have a reservoir of crude and a cheap method of extraction, don't wait, pump it now while the market is beckoning. That price may not be there tomorrow. In simple language, that is the advice from BP's World Energy Outlook, the oil major's annual long-term forecast of energy trends. According to BP, there is so much oil out there that the sheer volume overwhelms any reasonable forecast of our needs as far out as 2050.

The oil company is more bullish about demand for transport fuels than other forecasters, including Shell. BP reckons that oil consumption will peak in the 2040s, sustained until then by the thirst of Asian motorists while Shell thinks the watershed could arrive within a decade.

BP's logic is in the simple numbers; a global resource of 2.6 trillion barrels of oil that can be extracted using today's technology and aggregate demand rising at the oil company's fairly optimistic forecast of a rate of 0.7 per cent per annum over the next two decades. On that basis, cumulative demand for oil by 2035 totals 700 billion barrels, about a quarter of the global total available and less than the recoverable oil in the Middle East. Looking out even further to 2050, the available oil that we know we can suck out of sedimentary rock today is double the amount we need to keep cars motoring, ships sailing and planes flying.

Those numbers put our current obsession with the recent surge in oil prices into stark perspective. Two- thirds of the total technically recoverable resource of 2.6 trillion barrels is to be found in the Middle East, the former Soviet republics and in America, again more than enough to cover aggregate forecast demand to 2050. These are mostly onshore oilfields in the Middle East and in Siberia as well as deep-water oilfields in the Gulf of Mexico and oil from shale in Texas and North Dakota. These represent some of the largest oil reserves on the planet and can be recovered at low or medium cost. The question then posed by BP is what can we assume will be the likely behaviour of oil producers when faced with the choice of drilling now or keeping oil off the market.

BP reckons that producers of low-cost oil will chase the last dollar of demand, that the market share of Middle East/OPEC, Russian and American producers will surge from 56 per cent today to 63 per cent in 2035. The oil industry will become dominated by the more efficient producers, the Walmarts of liquid fossil fuels offering lower, reliable prices and convenience, leaving little room for marginal higher-cost players, except in brief periods of exceptional higher pricing.

If BP is right (and the recent behaviour of Saudi Arabia suggests the British oil major is making reasonable assumptions) then it is correct to ask hard questions about the future viability of Canadian oil sands. It is also worth asking whether the Keystone XL pipeline, now promised by President Donald Trump to the obvious delight and relief of Prime Minister Justin Trudeau, will really do much to improve the economics of new oil sands investment.

For too long, oil producers have been spellbound by the concept of draining tanks and dwindling inventories. Instead, and for the foreseeable future, every new piece of oil infrastructure needs to be benchmarked against low-cost production: In other words, this is no longer an exploration game, it's a manufacturing business where the margins are earned by maximizing efficiency in production and distribution in order to deliver the keenest price.

BP assumes that the global car fleet doubles to 1.8 billion by 2035, thanks to a continuing expansion in the numbers of Asian drivers, but that the take-up of electric vehicles will be only 100 million, a mere 6 per cent of the total global car park. But these numbers are pessimistic. Consider that oil consumption in the OECD countries has been more or less flat during the recent period of weak fuel prices; what is driving down oil demand is government regulation and consumer behaviour.

This winter, across Western Europe, there have been pollution alerts in major cities, blamed mainly on particulates and nitrogen dioxide from vehicle exhaust. France has responded with a scheme to ban outright older vehicles from Paris. London is likely to follow suit; where these cities go, Beijing is sure to follow. Oil is now in its dotage.

Carl Mortished is a Canadian financial journalist based in London.

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