Oil price forecasting follies

Kevin Kelly skewers the EIA for this oil price forecast (“Another Intelligence Fiasco”):

oil_prices.jpg

Oil price forecasting, like all forecasting, is difficult. But the DOE’s oil prices forecasts for decades have reflected a Disney-like “wishing will make it so” element, which has had a huge negative effect on government decisions on R&D investments and other public policies. Forecasts are always wrong, and the solution is to redo them regularly to capture the best information. But in that process it’s essential to not let optimism overtake serous thinking about the consequences of being wrong. Today with oil at $120+ and the global economy staggering, we can look back and say–shouldn’t we have seen this coming? Serious scenario thinkers certainly did.

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