Friday, June 13, 2008

EIA's Lousy Predictions

Eric de Place at Seattle's Sightline Institute has some interesting recent statistics from the US Energy Information Agency:
  • In February 2008, the EIA forecast that gasoline prices would peak at $3.40 in the spring.
  • In March, they forecast that prices would peak at $3.50 in the spring.
  • In April, they forecast that gas prices would peak at $3.60 in the spring.
  • By early May, prices were at $3.57 and climbing, so the new official projection said that prices would peak this month, in June, at $3.73.
  • By late May -- just weeks after the new forecast -- the average price was already at $3.94. And yesterday's national average gasoline price was $4.04. So now they're saying that prices will peak in August, at $4.15.
Obviously, as de Place shows, the EIA doesn't know what they're talking about, or are making predictions purely for political purposes. Which means you might well wonder how accurate their predictions of peak oil are -- which put it far out into the future.

There have always been reasons to doubt the EIA numbers, simply because they were coming from a government -- a very interested party. I think de Place has show here that they are losing credibilty very fast.


John Fleck said...

David -

I'm not sure that ability to forecast oil and gasoline prices in this environment is a reasonable test of anyone's credibility. Given the current volatility, this is a system that is inherently unpredictable, and anyone who tries is likely to be wrong, or correct solely by accident.

Dano said...

But you have to wonder why their forecast of reserves is so far off of everyone else's (that isn't an OPEC producer). Myself, I default to 'more of the same: lying to the public'.