The 2006 Economic Forecast
Oil Remains a Wild Card
by Ronald R Cooke
The Cultural Economist
Author "Oil, Jihad & Destiny"
Feb 3, 2006
Introduction
Every fall, BusinessWeek polls economists and investment firms for their estimates of how the American economy will do the following year. It then tabulates a consensus forecast based on the mean for each economic data category.
Just for the fun of it, I did my own projection of GDP, unemployment, inflation, the price of oil, and a number of other economic statistics for 2005. The results were published in January of 2005. In this article we compare these forecasts with actual results, and discuss how confusion in the oil and natural gas markets make it difficult to predict America's economic performance in 2006.
How Did We Do In 2005?
Oil. Thomson First Call consensus estimates placed average benchmark West Texas Intermediate (WTI) crude prices at $37.67 a barrel in 2005. Frederick P. Leuffer, senior energy analyst for Bear Stearns, believed oil would drop to an average of $25 a barrel. Fadel Gheit, Senior VP of Oil Research at Oppenheimer and Co. thought oil might drop to $30 a barrel sometime in 2005, and Morgan Stanley predicted that WTI would average $36.60 for the year. My oil price forecast for 2005 was $37.00 per barrel. Many forecasters believed there would be a surplus of oil, and that declining oil prices would lead to a decrease in oil company earnings.
On the other end of the forecast spectrum, Charles T. Maxwell at Weeden and Co. thought oil would average $57 for the year. As it turned out, the average annual price for a barrel of WTI in 2005 was $56.64 (EIA/DOE data). As for refinery earnings: they went through the roof.
Congratulations to Charley Maxwell. He got it right. GDP, Inflation and Unemployment. Here is a comparison of the data from an article I published at the beginning of 2005 with the actual results -
(Click here to continue reading)
by Ronald R Cooke
The Cultural Economist
Author "Oil, Jihad & Destiny"
Feb 3, 2006
Introduction
Every fall, BusinessWeek polls economists and investment firms for their estimates of how the American economy will do the following year. It then tabulates a consensus forecast based on the mean for each economic data category.
Just for the fun of it, I did my own projection of GDP, unemployment, inflation, the price of oil, and a number of other economic statistics for 2005. The results were published in January of 2005. In this article we compare these forecasts with actual results, and discuss how confusion in the oil and natural gas markets make it difficult to predict America's economic performance in 2006.
How Did We Do In 2005?
Oil. Thomson First Call consensus estimates placed average benchmark West Texas Intermediate (WTI) crude prices at $37.67 a barrel in 2005. Frederick P. Leuffer, senior energy analyst for Bear Stearns, believed oil would drop to an average of $25 a barrel. Fadel Gheit, Senior VP of Oil Research at Oppenheimer and Co. thought oil might drop to $30 a barrel sometime in 2005, and Morgan Stanley predicted that WTI would average $36.60 for the year. My oil price forecast for 2005 was $37.00 per barrel. Many forecasters believed there would be a surplus of oil, and that declining oil prices would lead to a decrease in oil company earnings.
On the other end of the forecast spectrum, Charles T. Maxwell at Weeden and Co. thought oil would average $57 for the year. As it turned out, the average annual price for a barrel of WTI in 2005 was $56.64 (EIA/DOE data). As for refinery earnings: they went through the roof.
Congratulations to Charley Maxwell. He got it right. GDP, Inflation and Unemployment. Here is a comparison of the data from an article I published at the beginning of 2005 with the actual results -
(Click here to continue reading)
posted by Oil Shock at 2:00 PM
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