Oil forecasting off-target

It’s a slippery slope for experts trying to predict the price of oil. Their record makes weather forecasting look easy.

Since 1985, federal government forecasts on oil prices have missed the mark, on average, from 6 percent to 116 percent.

“I’ve done 120 short-term energy outlooks and I’ve probably gotten two of them right,” said Mark Rodekohr, a veteran Department of Energy (DOE) economist.


“We’ve long been embarrassed by our mistakes,” he said.

Private forecasters have done little better. Even with Monday’s big drop, if oil prices don’t fall a lot further, 2007 will mark the ninth year in a row that the “market consensus” guessed low on how high oil prices would go.

On average, private forecasters have undershot their target by 31 percent each year, according to a recent analysis by Deutsche Bank. In the past five years, the price of a barrel of oil has tripled. The fact is, few experts saw it coming.

Star-Tribune