The international oil prices for the next three months, year, or ten years from now are impossible to forecast with any degree of reliability. Those who are forced to forecast prices as part of an economic feasibility analysis for long-term investments in the energy sector are bound to be proven wrong by events. Yet, at least, the forecasts must make analytical sense. This was not the case for the forecasts made in 2004 by DOE-EIA and the International Energy Agency, IEA, in their respective flagship reports “Energy Outlook” and “World Energy Outlook”. This led me at the end of 2004 to write an alternative analysis.
- The longer version is: “Factors influencing the International Price of Oil in the Medium to Long-Term”.
- The shorter version is: “Is the Oil-Price Increase from 2003 to 2005 an Indicator of a Long-Term upward Shift in the Price of Oil?“.
Unlike the EIA and IEA at that time, I concluded that we were witnessing a parameter shift in the medium to long-term price of oil on the international market. Yet, like all oil price forecasters, I also got my price forecast wrong: I underestimated how fast and how deep the impact was going to be on the international commodity market of having a giant like China growing at more than 10 percent per year.