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Just How Accurate Are The EIA’s Predictions?

February 14, 2016

Just How Accurate Are The EIA’s Predictions?

The EIA recently published the February edition of their Short-Term Energy Outlook. If you follow this month to month, and I do, you will notice their prognostications change a little every month. And over several months those small changes can add up to some rather dramatic changes. Nevertheless, below are several charts with their current oil production projections.

The EIA STEO only gives monthly data for total liquids. All C+C data is quarterly and annually. The monthly projected data begins in February 2016. Projections for quarterly and annual data begins January 2016.

ST Non-OPEC Liquids

The EIA says Non-OPEC total liquids dropped .5 million barrels per day in December and another .36 mbd in January. But then, other than another short drop in the first quarter of 2017, they see things leveling out for the next two years.

ST World Liquids

For the total world, the EIA expects far better production numbers than just for Non-OPEC. They expect new highs to be reached in 2016 and again in 2017.

ST US Liquids

They see US total liquids dropping in 2016 then they begin a slow rise through 2017, but not overtaking the peak in 2015.

ST Russia Liquids

Apparently the EIA thinks Russia has had it. They see a drop in December 2016 then a huge drop in January  2017. I have no idea why. However the scale here makes the decline seem greater than it really is. From January 2015 to December 2017 the decline is only 400,000 barrels per day.

…click on the above link to read the rest of the article…

The Pentagon’s secret pre-crime program to know your thoughts, predict your future

February 2, 2016

The Pentagon’s secret pre-crime program to know your thoughts, predict your future

US military contractors are mining social media to influence your ‘cognitive behavior’ when you get angry at the state

The US Department of Defense (DoD) wants contractors to mine your social media posts to develop new ways for the US government to infer what you’re really thinking and feeling — and to predict what you’ll do next.

Pentagon documents released over the last few months identify ongoing classified research in this area that the federal government plans to expand, by investing millions more dollars.

The unclassified documents, which call on external scientists, institutions and companies to submit proposals for research projects, not only catalogue how far US military capabilities have come, but also reveal the Pentagon’s goals: building the US intelligence community’s capacity to forecast population behavior at home and abroad, especially groups involved in political activism.

They throw light on the extent to which the Pentagon’s classified pre-crime R&D has advanced, and how the US military intends to deploy it in operations around the world.

Could your social media signature reveal your innermost thoughts?

A new Funding Opportunity Announcement document issued by the DoD’s Office of Naval Research (ONR) calls for research proposals on how mining social media can provide insight on people’s real thoughts, emotions and beliefs, and thereby facilitate predictions of behavior.

The research for Fiscal Year 2016 is part of the Pentagon’s Multidisciplinary Research Program of the University Research Initiative (MURI), which was initiated over 25 years ago, regularly producing what the DoD describes as “significant scientific breakthroughs with far reaching consequences to the fields of science, economic growth, and revolutionary new military technologies.”

The document calls for new work “to understand latent communication among small groups.”

…click on the above link to read the rest of the article…

Energy round-up: six predictions for 2016

January 14, 2016

Energy round-up: six predictions for 2016

Photo credit:   James Russell

2015 proved to be an interesting year for energy and climate issues both globally and in the UK. Will 2016 hold more of the same?

Forecasting is a dangerous business, but here are six predictions you should keep an eye on.

1) The showdown on oil prices between Saudi Arabia and the US will intensify, and the Saudis will eventually break.

It looks like oil and gas prices are going to remain low for the foreseeable future, panicking both the oil industry in Saudi Arabia and the shale gas industry in the US.

The big question is whether Saudi Arabia can keep production high and prices low long enough to bankrupt enough of the American shale industry. The answer may come by the end of 2016 and several factors point to the Saudis breaking first.

For one, despite losses for the oil industry, low oil prices benefit many sectors in the US, especially as consumers now have more spending money in their pockets. However for Saudi Arabia, an oil-dependent economy, low prices are a clear loser.

There’s also the geopolitical dimension that will make worse Saudi Arabia’s financial problems. Saudi Arabia spends more on military spending as a percentage of GDP (11%) than any other country, is currently increasing this spending at a faster rate (21%) than any other country, and has a showdown with Iran on the horizon. To most observers, the public finances in Saudi Arabia are headed for disaster if nothing changes.

2) Renewables will set new records.

Despite low fossil fuel prices (including coal), wind and solar will set new records in 2016 for installations and generation on every continent. This is a pretty safe bet. For many markets, including the important US market, the year-to-year change in 2016 may set records too.

…click on the above link to read the rest of the article…

2016: Oil Limits and the End of the Debt Supercycle

January 7, 2016

2016: Oil Limits and the End of the Debt Supercycle

What is ahead for 2016? Most people don’t realize how tightly the following are linked:
  1. Growth in debt
  2. Growth in the economy
  3. Growth in cheap-to-extract energy supplies
  4. Inflation in the cost of producing commodities
  5. Growth in asset prices, such as the price of shares of stock and of farmland
  6. Growth in wages of non-elite workers
  7. Population growth

It looks to me as though this linkage is about to cause a very substantial disruption to the economy, as oil limits, as well as other energy limits, cause a rapid shift from the benevolent version of the economic supercycle to the portion of the economic supercycle reflecting contraction. Many people have talked about Peak Oil, the Limits to Growth, and the Debt Supercycle without realizing that the underlying problem is really the same–the fact the we are reaching the limits of a finite world.

There are actually a number of different kinds of limits to a finite world, all leading toward the rising cost of commodity production. I will discuss these in more detail later. In the past, the contraction phase of the supercycle seems to have been caused primarily by too high population relative to resources. This time, depleting fossil fuels–particularly oil–plays a major role. Other limits contributing to the end of the current debt supercycle include rising pollution and depletion of resources other than fossil fuels.

The problem of reaching limits in a finite world manifests itself in an unexpected way: slowing wage growth for non-elite workers. Lower wages mean that these workers become less able to afford the output of the system. These problems first lead to commodity oversupply and very low commodity prices. Eventually these problems lead to falling asset prices and widespread debt defaults.

…click on the above link to read the rest of the article…

 

Down the Ratholes of the Future

January 7, 2016

Down the Ratholes of the Future

The new year now upon us has brought out the usual quota of predictions about what 2016 has in store, and I propose as usual to make my own contribution to that theme.  I’ve noted more than once in the past that people who make predictions about the future really ought to glance back at those predictions from time to time and check how well they’re doing. With that in mind, before we go on to 2016, I’d like to take a moment to look back over the predictions I made last year.  My post on the subject covered a lot of territory in the course of offering those predictions, and I’ve trimmed down the discussion a bit here for the sake of readability; those who want to read the whole thing as originally published will find it here. In summarized form, though, this is what I predicted:

“The first and most obvious [thing to expect] is the headlong collapse of the fracking bubble […] Wall Street has been using the fracking industry in all the same ways it used the real estate industry in the runup to the 2008 crash, churning out what we still laughably call “securities” on the back of a rapidly inflating speculative bubble. As the slumping price of oil kicks the props out from under the fracking boom, the vast majority of that paper—the junk bonds issued by fracking-industry firms, the securitized loans those same firms used to make up for the fact that they lost money every single quarter, the chopped and packaged shale leases, the volumetric production agreements, and all the rest of it—will revert to its actual value, which in most cases approximates pretty closely to zero.

…click on the above link to read the rest of the article…

My Prescription for 2016: Collapse Early and Often

January 5, 2016

My Prescription for 2016: Collapse Early and Often

Tony Futura

We are in the time of year when most sensible animals living in northerly climates are hibernating in burrows and hollow tree trunks, while the somewhat less sensible pundits make their predictions for the coming year. My prediction is always the same—things will go on more or less same as before, until something major breaks, while the probability of something major breaking goes up with each passing year. I have called this event “collapse,” and have predicted, year after year, that it will eventually happen. And so, instead of repeating this less than useful prediction, this year I will instead provide a prescription.

Not too many people, I expect, will want to follow my prescription; not too many of my family members, or friends, or acquaintances, or you who are reading this. And that’s fine because, as I have learned over and over again, there is no strength in numbers. Quite the opposite: the probability of any given trick working is in inverse proportion to the number of times it is tried, or the number of people who try it. And so, if you are reading along and think “I can’t possibly do this because of [insert lame excuse]!” then—good! Fine with me. Fewer people equals more oxygen.

And that applies to the few people who will actually bother to read this. Lots more people will not want to read this, because—what collapse? Gasoline prices are low, Obama has shut down most of the wars, the economy is strong enough for the Fed to have started hiking rates, and once Bernie Trump gets into the White House, everything else will be set right too. To the people who think that, someone like me, who predicted collapse a while back, was clearly wrong, and needs to be psychoanalyzed, not followed. Again, fine with me, so long and thanks for all the bullshit.
…click on the above link to read the rest of the article…

Some long term climate scenarios

December 15, 2015

Some long term climate scenarios

Scenarios are not predictions, just ways of describing possible futures; useful in order to be prepared for unexpected events. The only rule in scenario building is that the assumptions should not be too improbable; such as involving time machines. And, yet, it seems that in some cases involving climate projections, time machines are a built-in assumption. 

The COP21 conference in Paris has brought again climate to the attention of the public and, from now on, there starts the real challenge: what can we really expect for the future of the earth’s climate? As always, predictions are difficult, especially when there are many variables involved. Nevertheless, climate change is the result of physical factors that we can understand and we know that the build-up of greenhouse gases in the atmosphere – if it continues – is going to lead us to a very unpleasant future.

If we look at the long-term future, the whole question rotates on whether we manage to stay below an increase in temperature that is believed to be “safe” (it might be 2 degrees C, but we don’t know for sure), or we pass the limit and we find ourselves above the “climate tipping point” after which the system starts moving by itself toward more and more warming with all the associated disasters.

So, I thought I might engage in a little exercise of qualitative “scenario building” with a special focus on climate. Here are some scenarios; listed in no particular order. Some you could see as horrible, some as unlikely, others as overoptimistic. But they are just that: scenarios. The COP21 was a step in the right direction. Avoiding the worst outcomes will not be easy, but it is up to us.

…click on the above link to read the rest of the article…

The Trouble with the Future

December 12, 2015

The Trouble with the Future 

Feeeeeelings

PARIS – Yesterday, we got so much mail on our recent issue on Donald Trump we couldn’t read it all. Pro… con… off the wall – readers’ sentiments were all over the place.

But a clever reader mercifully brought the discussion to an end with this quote from fellow Baltimorean H.L. Mencken:

“As democracy is perfected, the office of the President represents, more and more closely, the inner soul of the people. On some great and glorious day, the plain folks of the land will reach their heart’s desire at last and the White House will be occupied by a downright fool and complete narcissistic moron.”

HLMenckenHL Mencken as a young man in front of his pre-war word processor. There’s a trenchant Mencken quote for nearly every occasion. If we could, we’d resurrect him.

Photo via Wikimedia Commons

All over the world, elections allow the people to express their innermost thoughts and feelings. This is a big day in Argentina, for example. Outgoing president Cristina Kirchner is supposed to hand over power to her successor, Mauricio Macri.

But when we looked yesterday, there was dispute as to exactly what time the baton would be passed. And Cristina has let it be known she would not attend the inaugural and would generally make life as difficult for Mr. Macri as possible.

meetingThis photo is simply too funny not to show it – it cries out for a caption contest actually. Background: Kirchner asked Macri to visit her in the presidential palace, so she could personally congratulate him on his victory. And she said to him to “come alone”, which immediately spawned the twitter hashtag #VeniSolo (#ComeAlone)

Photo via tn.com.ar

CUoS_ZqW4AEcc-5Image from an #VeniSolo tweet …Photo via pravda-tv.ru

…click on the above link to read the rest of the article…

The FOMC Decision – Studying the Flight of Birds and Gold

June 21, 2015

The FOMC Decision – Studying the Flight of Birds and Gold

Federal Open Yawn Committee puts Kremlinologists all over the World to Sleep …

The Fed’s monetary policy statement delivered on Wednesday was the non-surprise/yawn-inducer of the year. Readers can take a look at the trusty WSJ statement tracker, which reveals that apart from a few minor and unimportant changes, the statement was basically a carbon copy of the last one.

Not a single dissent mars this bland exercise in bureaucratese, so there isn’t even anything to report on that front. If you have trouble sleeping, reading this statement might be a very good alternative to Valium.

So did anything noteworthy happen? Well, yes. Apparently market participants believe they have to react to the forecasts of a bunch of bureaucrats who are quite likely among the worst economic forecasters in the world – and that’s really saying something.

augursAugurs in ancient Rome, observing the behavior of hens.

The High Priests of Augury

It is widely assumed that it is the job of economists to “make predictions”. This is actually not the case. The job of making predictions is that of augurs and soothsayers. In fact, modern-day economists strike us as today’s equivalent of the caste of augurs in ancient Rome.

As Wikipedia informs us:

“The augur was a priest and official in the classical world, especially ancient Rome and Etruria. His main role was the practice of augury, interpreting the will of the gods by studying the flight of birds: whether they are flying in groups or alone, what noises they make as they fly, direction of flight and what kind of birds they are. This was known as “taking the auspices.” The ceremony and function of the augur was central to any major undertaking in Roman society—public or private—including matters of war, commerce, and religion.”

(emphasis added)

…click on the above link to read the rest of the article…

 

U.S. Department of Energy: Our forecasts aren’t really forecasts (or are they?)

January 18, 2015

U.S. Department of Energy: Our forecasts aren’t really forecasts (or are they?)

Put this in the category of things that can’t be true, but that are nevertheless affirmed with a straight face: The U.S. Energy Information Administration (EIA), the statistical arm of the U.S. Department of Energy, does not issue forecasts, at least not long run forecasts.

So says Howard Gruenspecht, deputy administrator of the EIA, in a letter to Nature, the respected science journal. Gruenspecht was responding torecent coverage of an alleged EIA forecast which paints a rosy picture of U.S. domestic oil and natural gas production through 2040, a view challenged by the article in question.

Here is the bureaucratese from the letter: “Contrary to the presentation in the Nature article, EIA does not characterize any of its long run projection scenarios as a forecast.” Long run projection scenarios….huh. What could those actually be if not forecasts? And, why is the deputy administrator making such a big deal of this? We’ll come back to the second question later.

There has been little notice concerning the flap over coverage of the EIA’s recent nonforecast and the divergence of that set of “projections” from another much more pessimistic forecast issued by the Bureau of Economic Geology at the University of Texas at Austin. To cut to the chase, Naturestands by its story; and, I see no reason why it shouldn’t.

Perhaps the most important piece of information to come out of this kerfuffle is the insistence by the EIA that it doesn’t issue forecasts. Imagine my surprise! I have been perusing the EIA’s statistics on an almost weekly basis for years, and I have occasionally offered critiques of what I was sure were forecasts–lengthy complicated documents with color graphics and tables and elaborate justifications for energy production numbers far into the future. What’s more, everyone else called these documents forecasts, too.

…click on the above link to read the rest of the article…

 

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