Ah but...

Very interesting graph. Drawn in autumn 2006 (or the data seems to end there).

The price reached $56 at the start of Jan 07 significantly below the $68 that your graph gives as its 95% confidence interval lowest point (and way below the $80 mid-point). In other words the graph would now be much lower if the maths was done in early 2007.

Most of the rise in the graph is since mid 2004 (about $35 out of a $50 rise). This could just be a blip.

Also OPEC is now cutting production. Since they know that we can live with higher prices the US negotiating power on the Saudis to keep pumping has been reduced and we should expect permanently higher prices - after all it isn't a free market and so they should behave rationally and manipulate supply like all monopolists.

In consequence the raw price data is not a reliable indication of possible supply (which works for and against any position based on the data ie including my comments).

It is a bit like the graphs drawn after UK mid term local government elections which tend to show that the ruling party will soon cease to exist. Sadly these graphs have not been borne out by experience with any of the last three PMs.

That said even a graph now would show the same basic point of rising prices, so perhaps I should have ended with Apocalypse a little bit later.

The BBC notes that oil is expected to return to a bull market and large hedge funds may be playing games:

http://news.bbc.co.uk/2/hi/busin.../6233589.stm? ls

Do you ever listen to The Long View on radio 4? I think you might like it (tho most of the content sounds like whatever recent history graduates can dig up pronto there is always something interesting). They did one on 1907. People then were calling for a limit on the use of air balloons suggesting that they would be widely used in war and that this would be inhumane (no civilised country would do it one editorial comment said).

At first I thought this showed how difficult future watching is. But then of course within a few years air war was important and in WWII perhaps vital (and certainly inhumane). So perhaps even if one can't predict the future it may be some version (in that case much worse) of what one expects.
davidov | 08.01.07 - 11:49 am | #

http://www.econbrowser.com/ archi...s_bringing.html
Sam | Homepage | 25.01.07 - 12:30 pm | #

It looks like your chart is still accurate. We're at around $127 right now. Maybe you should continue this past 2009.
Matt the Engineer | 16.05.08 - 5:52 pm | #