Comments on: Another Intelligence Fiasco

By: Kenneth Green

Kenneth Green — Wed, 13 Aug 2008 17:38:19 +0000

I think that you may be jumping the gun here. First, EIA’s forecast is about long term trends, not short-term spikes. it’s entirely possible that if oil drops back down sharply in the next few years of global economic slowdown, the recent spike won’t change the trajectory of the 2030 prediction. Second, the entire idea of “improving forecasting” is a bit of a joke. We never have, and never will be able to predict the future in a meaningful way. There are simply too many variables, and too many non-linear factors to allow for such prediction. To think otherwise is to succumb to Hayek’s “fatal conceit,” that afflicts planners worldwide.

By: Curtis Fromke

Curtis Fromke — Tue, 12 Aug 2008 07:56:33 +0000

Theoildrum.com seems to have a discussions concerning this with detailed ideas of what to do. The last years the information coming from the government has been crafted to support the current administration. A factor of 2 is good compared to the prognositications on Iraq et al. Environmental science textbooks have been describing what was coming for the last 20 to 30 years. It is as though we went out of our way to not see the obvious. Rickover seems to have had a prescient speach back in the 50′s. Even if the projections had been “right on”, would that have made any difference? I think not. Shock and awe is what we are getting at the pump. T. Boone Pickens seems to have some ideas that the Energy Informaton Agency could be a valuable way for them to spend their budget.

By: Gavin Andresen

Gavin Andresen — Mon, 11 Aug 2008 15:17:19 +0000

Is there any reason to believe that giving the Energy Information Agency more money will lead to better results in the future?

Rewarding failure seems like bad policy to me. A better policy would be to reward success; give everybody at the Energy Information Agency bonuses tied to the accuracy of their forecasts.

Then again, it would be a lot cheaper to get rid of the Energy Information Agency and just use the price of oil futures contracts (I bet a dollar that they’ve been better at predicting the future price of oil than the Energy Information Agency).

By: Christopher

Christopher — Mon, 11 Aug 2008 14:21:19 +0000

Oil isn’t the only energy item that the EIA misses the mark for. While not nearly as drastic as the off-by-a-factor-of-two, their trend lines on the growth of electricity rates seem to be unrealistically shallow.

Here’s the link to the section of the Energy Outlook 2008 report I’m talking about: http://www.eia.doe.gov/oiaf/aeo/electricity.html

The cost of incremental transmission flatlines between 2015 and 2030 (table 6)- I can’t quite see how that’s going to work given the current state of congestion on several transmission corridors.

Figure 70 shows a nice stable cost projection for coal – which has shot up at nearly the same rate as oil over the past year, *and stayed at high prices – unlike oil*

Cost projections for bringing new plants online (especially nuclear) have more than doubled from 2000 numbers (see WSJ, 05/27/2008)

These factors don’t seem to figure into the retail price projections that EIA makes in Figure 71.