Is Canada prepared for $0 oil? We have had a hard enough time with the post-2014 plunge in fossil-fuel prices, which has weakened the dollar and is playing havoc on big parts of our economy. But that was just a crisis of excessive supply. Are we ready for the day when the demand dries up?

That day may be coming sooner than we think. And no, we are not really prepared.

A draft federal-government study obtained by the CBC under an Access to Information request, prepared by the government trend-forecasting office Policy Horizons Canada, starkly makes the case that oil may be on the verge of becoming almost worthless.

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The researchers analyzed worldwide pricing and technology and policy trends that are driving the price of non-fossil electricity sources downward at a far faster pace than expected – along with surprisingly rapid technology-driven decreases in the price of grid-level energy storage and alternative-energy vehicles, manufacturing and heating. They found that we could be much closer than we think to an era when renewable and alternative-energy sources become significantly cheaper than fossil fuels.

As a result, it concludes, "a new electricity-based industrial ecosystem could emerge at a much faster rate than expected, significantly disrupting fossil-fuel markets." Within a generation, global petroleum demand could "decline further and faster than expected with significant impacts on high-cost producers," such as Canada.

But surely, you might say, there will still be demand for fossil fuels for many decades. Electric motors with sufficient torque to power tractors, transport trucks and other heavy equipment, to say nothing of jet engines, have not yet been invented. Many countries have new fossil-fuel generating stations with decades of life in them. The full transition to alternative energy could take the rest of this century, couldn't it?

The problem, as many energy investors know, is that the shift from mass to marginal use of petroleum will not be matched by a similar downward shift in levels of production and distribution. Quite the contrary: Producers will all want to try to recoup their existing exploration and development investments by fully pumping out their plays. Countries sitting on huge reserves will want to put them on the market while the market still exists.

We saw that taking place this week in Vienna, where OPEC failed to reach an agreement not to flood the market with oil. The combination of a gross supply glut and a huge public shift away from carbon-based fuel could result in a situation, in the words of the Ottawa report, where "oil could lose its commodity status." That is, the $0 barrel could become reality.

Oil investors greeted this report with a yawn: For many people in the energy sector, this prediction is their daily reality. While investors rolled their eyes at the 1990s "peak oil" theory – that reserves would start to run out just as demand peaks – they are giving much more credence to this opposite theory, which could be called "trough oil."

Oil investors are calling on energy companies to start selling off their assets, paying out their investors through dividends and preparing for the end. Oil executives insist that they have priced in the coming decline. Some experts say they have not come close. As Paul Sankey, an oil-industry analyst with New York's Wolfe Research told an energy forum in Calgary this week, according to CTV: "Demand forecasts are way too positive … really, the essence of the opportunity for oil is to be dividend stocks to pay out. Not to attempt to grow, but actually to orderly liquidate."

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It may be just as well Canada's pipeline projects have all become bogged down in political opposition: If we had gone ahead with them, they might soon have turned out to be massively expensive stranded assets. As the Ottawa report notes, "this plausible future would suggest that governments ensure that the risks of further investments in oil and gas infrastructure be borne by private interests rather than taxpayers."

Canada is luckier than many countries: Only half of our export revenues are tied up in resources. But we should listen to the markets: Rather than scrambling to catch a diminishing share of the oil economy's last moments, we should start admitting that there's nothing wrong with seeking a smarter economy.

Editor's note: An earlier digital version of this article incorrectly said the draft of the federal-government study was leaked to the CBC this week. In fact, the study was obtained by the CBC under an Access to Information request. This version has been updated.