Will Oil Price Rise or Fall?
Lawrence Kudlow is his usual optimistic self predicting that the market price will decline. James Hamilton notes that the Cambridge Energy Research Associates is not as optimistic. CERA’s reasoning can be found here:
Disruptions to supplies of gasoline, diesel fuel, and light products, associated in part with changes in fuel quality standards, will keep oil markets tight and prices high during the next 2 years, Cambridge Energy Research Associates forecast in a report issued June 6. “Incremental additions to refining capacity over the next 2 years [will] be insufficient to meet new global demand,” it predicts.
Dr. Hamilton provides a nice summary of various views on the future price of oil. He also notes that CERA shared Kudlow’s optimism a year ago ending with:
The EIA’s benchmark forecast calls for global petroleum consumption to grow by 1.4% per year through 2030. And where’s all that new oil supposed to come from? EIA is counting on Saudi Arabia, for example, to increase its capacity to 14.4 mbd by 2010 and 17.1 mbd by 2030. I wonder if that’s another forecast that we’ll see get revised.
The difference between organizations such as CERA and EIA is that they present their (sometimes differing forecasts) complete with the underlying assumptions. If someone wants to look back on how actual market events panned out as compared to what they had forecasted, such comparisons of forecast errors can readily be done. Given Kudlow’s propensity to forecast good news on the oil market front – shouldn’t the National Review provide a summary of his prior forecasts versus actual market events?