By extending an existing
oil price graph in constant
dollars by two years, freight
management consultant,
Bentley Cook, may have
conjured up an instant
10-year forecast.
About a year ago, an
on-line oil & gas site carried a
graph compiled by US energy
consultant William Edwards,
in which he had overlaid oil
price data for the 2004-2013
period on top of a data line for
1973-1993 – choosing those
starting dates because of
“similar industry situations”.
And the two lines closely
matched each other’s
movements. So much so that
Edwards asked: “Do you
suppose that the remaining
years of the 2000-2025 span
will mirror the preceding
historical pattern?”
To help answer this
question, SA’s Cook then
took oil price data for the
years 2014 and 2015 and
superimposed them on to the
Edwards’ graph.
And again – an intriguing
match.
“You will note how closely
the extended line follows the
1973-1993 pattern,” Cook
told FTW. “Is this sufficient
evidence of a continuing
similarity? If so, you have the
makings of a ten-year price
forecast.”
Of course, it is no
guarantee that the 2000-
2025 time span will mirror
the previous time span.
Oil price graphs often
show up cyclical patterns,
but seldom true matches.
This is due to extraneous
imponderables and variables
such as the current slowdown
in Chinese growth;
improved technology leading
to decreased consumption
of fuel; alternative/green
fuels; population growth;
increased industrialisation
of developing countries; and
many other reasons.
But it is very much worth
bearing in mind as a forecast
– as good, if not better than,
most others.
