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Page added on August 21, 2007
Do EIA Natural Gas Forecasts Contain Systematic Errors?
In the July, 2007 issue Public Utilities Fortnightly, we published the article
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The well-head price of NG was underestimated in 21 of 22 annual forecasts (95%)
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Consumption of NG by electric generators was underestimated in 22 of 22 forecasts
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Domestic production of NG was overestimated in 19 of 22 forecasts (86%)
In other words, of 66 annual forecasts of these crucial variables, EIA made an overly optimistic projection in 62 of them (94%).
Importantly, these errors were not merely of direction, but also of magnitude:
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In 2002, the EIA projected the cost of NG to electric generators in 2006 would be $ 3.82 per mcf. Actual cost per mcf was $7.15 (all in 2006 dollars).
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In 2003, the EIA overestimated domestic NG production in 2006 by almost 2 trillion cubic feet
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