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Page added on August 12, 2016
Robert Rapier: Midyear Prediction Check
In January of this year, as I do every year, I made several energy predictions for the upcoming year. (See My 2016 Energy Predictions). Now that half the year is in the books, I thought it might be a good idea to check in and see how these predictions are tracking.
As a reminder, I strive to make predictions that are specific, measurable, and preferably actionable. If forecasts are broad and vague, one can almost always declare victory. I would also remind readers that my predictions are based on what I believe will happen, which isn’t the same thing as predicting what I want to happen. My desire for a particular outcome has absolutely no bearing on a prediction. I am simply trying to accurately gauge the most likely outcome.
Here are the predictions, along with an update through the first half of the year.
1. U.S. oil production will suffer an annual decline for the first time in eight years.
I noted that I had the most confidence in this particular prediction. The only way I could foresee this one going awry was if oil prices made a strong recovery to $60/bbl very early on — which I didn’t expect to happen.
In this case, I will just let the graphic speak for itself:
The numbers are only available through April of this year, but production has been falling pretty steadily now since last April. This still looks like the first time in eight years that year-over-year U.S. crude oil production will decline.
2. The closing price of the front month West Texas Intermediate (WTI) crude contract will reach $60/bbl in 2016.
When I wrote that prediction, the price of WTI was $36.14/bbl. The price was going to require a gain of 66% from that price in order to be proven right. I noted that this was a very aggressive prediction.
I also noted that I would grade this one on a curve due to the aggressiveness of the prediction. I would consider it a complete fail if prices failed to crack $50/bbl this year, which was still 38% above the price at the time I made the prediction.
The price of WTI thus far has closed as high as $51.23/bbl, in early June. Despite a recent headline-making prediction by analyst Gary Shilling that the price will still fall to $10/bbl (a prediction he has been repeating for over a year), we have almost certainly seen the lows for this cycle.
However, there is also still resistance to the upside. There is a lot of shut-in production that will begin to come online if prices head toward $60, and the Brexit vote has fanned concerns of a stronger dollar and weaker demand. Further, global inventories are still at very high levels. Considering that oil has already moved up some $15/bbl since I made this prediction, it isn’t a huge long shot at this point that it will be realized.
3. U.S. natural gas production will suffer an annual decline for the first time in 11 years.
In 2015 monthly natural gas production averaged 2.252 trillion cubic feet (tcf) per month. Through April of this year that number has declined ever so slightly to 2.246 tcf/month. 2015 saw two months above 2.3 tcf/month, while thus far in 2016 there have been no months above this level.
This one is too close to call, but it is tracking according to the prediction at this point. On the other hand natural gas prices have strongly advanced since January, and that may spur more production in the second half of the year.
4. The Energy Select Sector SPDR ETF (XLE) will rise at least 15% in 2016.
Despite my attempt to always make predictions that are specific and measurable, I realized after the fact that I failed to make an important distinction for this one. I didn’t indicate that the XLE would rise this much for the full year. The XLE has already crossed the 15% mark in 2016, which is impressive considering that it was already in negative territory when I made the prediction.
However, since then it has pulled back a bit and now stands at +12.3% year-to-date. But instead of declaring victory on this prediction, allow me to offer the important qualifier I inadvertently left off in January. I expect the XLE to finish the year up 15%.
As I said when I made this prediction “fundamentals will ultimately win out, and I think we will see the industry’s prospects start to improve before the end of 2016.” That has certainly happened, but a lot can still happen in the 2nd half of the year.
5. Hillary Clinton will win the 2016 presidential election.
This prediction actually generated a lot of angry emails and comments on Facebook. I had people call me a moron for being so naive as to believe Hillary would beat Bernie Sanders, and I have had people tell me in no uncertain terms that “Donald Trump will win in a landslide.”
Meanwhile, Clinton has since dispatched Sanders (to which many of those previous Sanders’ defenders have invoked various conspiracy theories instead of acknowledging the defeat), while she is tracking well ahead of Trump in national polls.
I previously noted that the reason for this prediction is that it has significant energy policy implications. And I will once again remind readers that I predicted Clinton would win for one simple reason: I believe she will win, and I expect President Hillary Clinton to pursue energy policies similar to those pushed by the Obama Administration.
Conclusions
My midterm grades are looking pretty good at this point. I always note that things are always obvious in hindsight, but I got a lot of push-back on these predictions when I made them. I even heard from a Commander in the Indian Navy who said that my 2nd and 4th predictions “defy the current trends and assessment by other studies.”
For the second half of the year I feel like all are on track to be correct, with the greatest uncertainty in the prediction that oil prices will reach $60/bbl this year. That price is on the way, to be certain, but with inventories still as high as they are that could still push into 2017.
Consumer Energy Report » R-Squared Energy Blog by Robert Rapier
16 Comments on "Robert Rapier: Midyear Prediction Check"
makati1 on Fri, 12th Aug 2016 6:45 am
Who cares? Not me! Throw the bones and guess at the future…lol
The land of the free today:
“Mysterious “Computer Glitch” Conveniently Cancels Hotel Rooms For Fed Protesters At Jackson Hole Event”
“Justice Department Prevented FBI Probe Of Clinton Foundation; Reporters Slam State Department Stonewalling”
“CNN Admits “We Couldn’t Help [Hillary] Any More Than We Have”
“Pentagon Refuses To Disclose How Many U.S. Troops Are Fighting ISIS”
“Mapping Millennials: Over-Educated, Under-Employed, Debt-Ridden, & “Looking To Make A Difference” In The World”
“Staggering Corruption Reveals NATO/NASA ‘Lies’ At The Heart Of The Pentagon”
“Obamacare On “Verge Of Collapse” As Premiums Set To Soar Again In 2017″
“Obama’s Administration Collected $20 Trillion In Taxes And Still Increased National Debt $9 Trillion”
“Rising Recession Risks & The Tears In America’s Economic Fabric”
“Brace Yourselves, America: The Next Huge Housing Bailout Could Be Coming”
“US Tax Receipts Have Never Done This Without A Recession”
“This Trend Tells You Everything You Need To Know About America’s Future”
“US Consumer Comfort Crashes To 3-Month Lows Led By Young, Black, Democrats”
“A Nation Of Sheep, Afraid Of Words: Lies, Damn Lies, & Hillary Clinton Lies”
“2016 Will End With Economic Instability And A Trump Presidency”
ALL today on Zero Hedge. They look like headlines from some 3rd world country, not the “indispensable”, “exceptional” US.
Cloggie on Fri, 12th Aug 2016 7:24 am
Robert Rapier is a Forbes hack, which he wouldn’t be if he didn’t represent establishment positions, number one being that Clinton should be hoisted in the saddle. So much for his “predictions”.
Forbes btw has more than average interest in energy matters so they give types like Rapier some space. But when Rapier says that Clinton will pursue energy policies like under Obama, he basically says that nothing will be done in matters of energy transition. The US is the only developed country that doesn’t have a renewable energy policy on the federal level (individual states like Texas do have these policies).
MikeX11.2 on Fri, 12th Aug 2016 9:00 am
Clinton will win the election because most people aren’t insane like makati1.
You put Trump the Demented up as your “candidate”.
You put up a candidate that has no logic processor to filter out ANY conspiracy theory. That’s not playing well with the majority of America, who isn’t insane.
And you can blame this on the right’s building it’s own propaganda network.
And I’ll say it again: The Purpose of Propaganda is to Fool the Enemy, NOT to FOOL YOURSELVES.
-Republican Climate Denial: Check.
-Republican Tax Policy: Check.
-Republican Governors Destroying Republican States with their Insane Economic Policy: CHECKMATE.
makati1 on Fri, 12th Aug 2016 9:32 am
Trump has the best chance, Mike. If the 3rd party takes Killary’s votes, he will win with the majority. The skitzo bitch is going to go to jail if there is any justice in the world. Or die of a brain hemorrhage. Or both. If you want bombs dropped on your city, vote for the war monger in a size 60XXX pants suit.
PracticalMaina on Fri, 12th Aug 2016 9:38 am
I am third party all the way at this point. Hillary has done far too much saber rattling as SOS. Republicans may not be the wise economist they claim to be, but they are pulling one over on the rest of the country, by expanding renewable’s and profiting all while continuing to assist the climate change deniers and their war on science.
Our past 8 years of policy concerning foreign policy, and environmental property has been a joke. Given some of this can be blamed on congress, and Trumps constant attempts to undermine the POTUS. But he should have done better, lying to the citizens saying we have abundant fossil fuels underfoot that will propel us to a world leader is a goddamn dangerous lie.
PracticalMaina on Fri, 12th Aug 2016 9:40 am
Lets get like six parties going so we can really bleed the corporate lobbyist, if they are going to buy our democracy, at least make them spread the money around to someone other than these two shitweasels.. Jill Stein all the way, the supreme court and Jeb stole Gores presidency, NOT RALPH NADER!
Cloggie on Fri, 12th Aug 2016 9:53 am
The polls are roughly 50/50, yet Mike version 11.2 (notorious for bugs), has declared the electorate of Trump, responsible for most of the US GDP, as “insane”.
PracticalMaina on Fri, 12th Aug 2016 10:17 am
I hope the attack adds are viscous and accurate, hopefully the third party will be pulling voters from both sides.
GregT on Fri, 12th Aug 2016 10:41 am
“Clinton will win the election because most people aren’t insane”
Good to see that some people are still able to maintain a sense of humour. Even if that humour is somewhat sick and twisted.
JuanP on Fri, 12th Aug 2016 10:45 am
What a load of crap! Go Trump! Anyone but Hillary!
Plantagenet on Fri, 12th Aug 2016 1:49 pm
Is Rapier pretending to be an ignoramus? He doesn’t know about the DNC emails released by Wikileaks that shows the DNC actively conspired to help Hilary beat Bernie? He does’t know the DNC head was forced to resign in disgrace when the emails where released? He doesn’t know that more DNC staffers were recently fired over this issue, and Seth Rich, a DNC IT staffer, was found mysteriously murdered after being fingered as the person who leaked the DNC emails to Wikileaks?
Rapier clearly isn’t very well informed.
Cheers!
peakyeast on Fri, 12th Aug 2016 4:07 pm
LOL – MikeX hasnt even noticed that both candidates has been put up to fool as many as possible and that they represent the same puppet masters.
Cloggie on Fri, 12th Aug 2016 5:02 pm
Trump definately does NOT represent the “puppet masters”. In that way he is unique since JFK and to a lesser extent Nixon.
jjhman on Sat, 13th Aug 2016 6:35 pm
It’s pretty easy to pick out the individual prejudices of posters as you watch them warp Robert Rapier’s words.
He did not HOPE or WISH that HRC would be elected. He PREDICTED her election. He didn’t asy it would be good or fair or beautiful to watch.
As of today that prediction looks pretty accurate. The Trump campaign is is a dumpster fire, primarily because he is in charge.
Hardman on Sun, 14th Aug 2016 6:00 am
If US voters can ignore Hillary’s dementia until after the elections, Rapier may be proven correct.
green_achers on Mon, 15th Aug 2016 4:27 pm
The media are helping Clinton in the general the same way they helped Trump in the primaries. By giving Trump a soapbox. Turns out general election voters aren’t as ca-ca as Republican primary voters. Who knew? Oh, wait that was everyone except for the blogosphere, LOL.