With a time horizon stretching out to 2035 the research team at BP set themselves a tough task, which essentially involves guessing how much energy the world will be using 21 years from now, and what sort of energy.

An obvious escape route for this exercise in future-ology is that everyone knows that a lot will change during the forecast period, and that by 2035 most of today’s critics of the exercise will probably be dead or in a retirement home.

If there is a use for the Outlook report, which is the fourth in a series from BP, it is in helping the industry consider the most appropriate allocation of capital for long-term projects thanks to the forecast rates of growth for the major sources of energy.

But, even that aspect to the report needs to be taken with a pinch of salt because it was only a few years ago that no-one was predicting the astonishing rise of shale-oil and shale-gas production in the US.

Today, this energy-source-from-nowhere is an increasingly important factor in the thinking of the oil majors, and for deeply-concerned members of the Organisation of Petroleum Exporting Countries.

So when The Slug spent an afternoon digesting the latest Outlook report from BP he was as interested in the forecasts as he was on the look-out for issues not discussed. That is when the question of costs, or at least the scant regard paid to costs, leapt out of the report.

There is not much point in explaining why costs are critical in the energy game. If you don’t understand that then you should consider another vocation.

Quite simply, if the world is heading into some sort of energy nirvana where supply is strong (and rising) and demand is moderate (and falling in the western world) then the result appears to be a time when the price of energy is more likely to fall than it is time rise.

If that is the case then it will be the low-cost producers that will survive, as it should be, though nowhere in the BP Outlook report is there a comment on who will emerge the winner from what looks to be a four-way energy drag race.

To understand the point about energy winners versus energy losers you need to skip lightly over the headline grabbing aspect of the document, such as overall energy demand rising by 41% by 2035, which is hardly a rocket-science projection as it simply implies annual expansion of demand of somewhere around 2%.

Nor is it difficult to guess some of the other projections, such as China and India being the big future energy markets (Slugcatcher’s dog could have told you that), or that the western world has migrated from being an energy guzzler into a service-based economy that uses far less energy.

What was interesting in the Outlook report was the forecast that by 2035 the energy world will be broadly divided into three primary sources of fuel: oil, gas and coal each with roughly 27% market share, leaving nuclear, hydro, and renewables to divvy up the remaining 29%.

In effect, about 21 years from now the world will still be largely (81%) powered by fossil fuels.

However, missing from that forecast of a fossil-powered future (much like our fossil-powered past and present) are two factors. They are:

• which of the fossil fuels will win the cost and efficiency competition
• what about the potential for a “supply surprise”, in the same way that directional drilling and rock fracturing technology is liberating tight oil and gas to produce a shale surprise

No criticism can be levelled at the BP Outlook crew for not suggesting a supply surprise, such as tight oil and gas being far more abundant than anyone is currently predicting. Anyone, that is, except The Slug who has a universal view of the world’s geology and reckons the lid on shale oil has only just been prised open.

Costs are a critical factor that has to be considered in future supply and demand projections, especially given the intensifying competition from cheap coal and abundant (and cheap) gas to do for the world what shale gas has done to the US energy scene.

As an exercise in predicting the future the BP report is interesting though not very useful, much like all exercises in crystal-ball gazing or, as Danish physicist, Niels Bohr, so famously said: “prediction is very difficult, especially about the future”