Imagine pulling into a gas station and filling up the tank of your Ford Explorer SUV for a whopping $1.50 a litre.

According to an energy report released Thursday by CIBC World Markets, that scenario could soon become reality. “Canadians should brace for $1.50 litre gas prices in the near future as global oil supply will increasingly have trouble keeping pace with demand,” says CIBC chief economist Jeffrey Rubin.

Depletion from existing fields has brought global production to a “virtual standstill,” Mr. Rubin said. At the same time, “huge project delays and massive cost overruns” are plaguing the world’s new oil mega-projects.

The CIBC report predicts that surging demand in developing economies, combined with escalating, rapid depletion and widespread delays on new projects will lead the global supply of oil to drop as much as eight million barrels a day below the U.S. Department of Energy and International Energy Agency’s estimates by 2012.

With demand for crude soaring in developing countries and in the world’s largest oil-producing countries, a widening demand-supply gap will send crude oil prices as high as $150 a barrel (U.S.) by 2012, CIBC said.

Oil prices reached a historic high above $100 a barrel last week, although they have since fallen to around $94 a barrel.

The record high sent the average price of gas in Canada to $107.6 cents (Canadian) a litre in the week ended Tuesday, according to MJ Ervin & Associates Inc., which tracks fuel prices. A year ago, when crude was trading at $61 (U.S.), the average price at Canadian pumps was around 92 cents (Canadian) a litre.

Cathy Hay, a senior associate at Calgary-based MJ Ervin, estimated last week that a dollar rise in crude boosts Canadian pump prices by about six-tenths of a cent. She also said that gas prices are much higher in the summer months, when demand for fuel skyrockets among drivers.

Jason Toews, the cofounder of gasbuddy.com, said last week that if crude remains above $100 this summer, Canadians could see $1.50-per-litre prices at the pump.

The CIBC economists reviewed nearly 200 new oil projects expected to start production over the next five years and found that scheduled production timelines are far too optimistic, with project delays appearing to be the norm among the group.

High costs and technically challenging fields, like the Canadian and Venezuelan oil sands, the Kashagan project in Kazakhstan and Russia’s Sakhalin II, have left global supply growth vulnerable to project delays. Delays in Venezuela and Canada alone will shave more than 700,000 barrels a day from earlier 2012 production forecasts, Mr. Rubin said.

The setbacks are happening at a time of accelerated global depletion in existing fields. The rate has climbed to over 4 per cent, which erases nearly four million barrels a day out of each year’s production. The CIBC report attributed the increases to the growing importance of offshore, and, in particular, deepwater fields, which have depletion rates twice those of conventional fields.

“Even holding the current depletion rate constant over the next five years, we must produce nearly 20 million barrels per day of new oil just to offset what will be lost through depletion during this period,” Mr. Rubin said.

The delays and depletion will result in a supply increase of only about three million barrels a day by 2012 - far below the 10 million barrels projected by the International Energy Agency.

The supply chain will be further strained by increased demand from OPEC and oil producing nations like Russia and Mexico, where consumption is forecast to increase by three million barrels a day, CIBC said. Domestic consumption gains in these regions will eat up virtually all of the projected increase in net world supply over the next half-decade.

“Soaring rates of car ownership in countries like Russia and China have boosted fuel demand in both countries,” Mr. Rubin said. “But an even more important factor has been massive price subsidization in OPEC countries, which has spurred extraordinary near double-digit growth in oil demand.”

Since crude demand in countries like China and India is far more income-elastic than price-elastic, these countries are likely to outbid OECD markets for increasingly scarce global supply, Mr. Rubin said. He expects that soaring crude costs will raise the price of gasoline in the United States to $4.50 (U.S.) a gallon, he said, which would cut American demand 10 per cent or nearly two million barrels a day by 2012.