In the battle to see who blinks first, OPEC hasn't blinked. And it looks like it isn't going to, as it meets this week in Vienna.
Six months ago the Organization of the Petroleum Exporting Countries, led by Saudi Arabia, announced it would keep pumping crude even though the world was swimming in the stuff.
While some analysts are predicting a surprise at this week's meeting, most reports now say OPEC is not considering reining in production.
- Global glut grows to two million barrels a day as OPEC pumps more
- Canada's crude production falls to nearly two-year lows, says Barclays
And whether or not OPEC continues to pump, there are new signs that Prime Minister Stephen Harper's dream for Canada as an "emerging energy superpower" may be in trouble.
A report this week from Barclays showed Canadian production tumbling. The global giants with a stake in Canada's oil sands have stopped expansion plans and many have walked away.
Meanwhile, Alberta oil producers have threatened to put new developments on hold until they see whether Rachel Notley's new NDP government gives them what they want.
Missing a crucial window
To add insult to injury, low prices have emboldened the "dirty oil" lobby. There are new reports this week that the New York oil hub is rejecting petroleum from Canada's "tarsands."
Alberta's oilsands may still contain some of the world's largest petroleum reserves, up there with Venezuela and Saudi Arabia, but there is an increasing danger that Canada has missed a crucial window to develop and extract those resources.
"There is no doubt about it, the price fall of the last several months has deterred investors away from expensive oil including U.S. shale, deep offshore and heavy oils," a Saudi Arabian official told the Financial Times last month.
There are two reasons why the current glut has come at the worst possible time for the future of Canada's oilsands.
Last year's attempt to label Canadian oil as "dirty" came to nothing. But there are increasing signs, perhaps partly due to the feeling there is no shortage of oil, that the global mood is changing. The Keep It in the Ground movement is gathering steam.
The oil industry itself is already turning against coal. At the same time the world is just reaching the point when technology is creating economic alternatives where fossil fuels used to be indispensable.
- Dirty oil label would have hurt Europe more than Canada
- How market forces are winning the climate change battle
Canadian oilsands development has always depended on the idea that the world was hungry for its production. That production depends on a huge investment, not just in extraction and processing, which is more costly than conventional liquid oil. It also requires heavy investment in infrastructure, specifically pipelines, to get bitumen to world markets.
Had global giants like Total, CNOOC and Norway's Statoil already sunk their investment into oilsands expansion before the current glut, if the pipelines had already been built while prices justified the investment, everything might have been different. That seems less likely now.
The longer OPEC keeps the world flush with oil, the stronger the climate change lobby grows, the less likely the private sector will be willing to invest the billions it will take to make Canada's unconventional oil resources accessible.
And by the time oil prices finally begin to rise, advances in green technology, competitive now, will make it an even stronger contender at each higher price level.
It will be a long time before the world can do without oil. And Alberta's bitumen will always be there if the world needs it.
But it is not at all clear that demand will ever again be strong enough to turn Harper's dream of Canada as an energy superpower into reality.
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