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@Dave S: According to a just released working paper from the International Monetary Fund...

Two words: Hydraulic fracturing. The study applies mathematical modeling to oil supply and demand, but does not consider recent advancement in technology. Fracking is responsible for the recent increase in US production, reversing a decades-long decline.

Also from the study: Future oil prices have been notoriously difficult to predict. In a recent paper, Alquist, Kilian, and Vigfusson (2011) conclude that forecasts based on monthly futures prices, monthly surveys of forecasts, simple econometric models, or other commonly employed forecasting techniques cannot consistently beat a random-walk forecast out of sample. This result is well known within the oil industry.

... thus their own prediction is probably not so reliable. The oil crystal ball has been confounding everyone forever.

by goldfish on Jun 2, 2012 3:55 pm • link • report

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