Quote from: RE on Today at 08:46 AMThe argument proved itself out quite accurately.  He was able to predict the collapse in oil prices 3 years in advance, to the month. 

Let us start with some basic observations based on his macro level graph and claims.

Firstly, correlation isn't causation for starters. Much like bell shaped curves and oil production...they appear to work until they don't.

Secondly, the universal claim that $125/bbl oil is required for operators to stay in business is disproven by the very idea that oil hasn't been that high since sometime near 2008-2009 spike, and guess what? Lots of oil producers still in business, these 17 years later. Producing more oil than that years particular claimed global peak oil as well.

As far as "predicting" anything, if he drew the lines with post 2015 data and then stated his conclusion, that isn't a prediction. It is an observation, coupled in this case with a bad conclusion, drawn from historical data. If he used this chart pre-2015 to predict the drop in oil prices, that would be different.

So...data is data, but drawing bad conclusions contradicted by your own information is the fault of the author. It should also be observed as to WHY oil price collapsed in 2015....it had nothing to do with two straight lines drawn by someone who's conclusion on the graph is producers only stay alive at an oil price not seen since 2008-2009. I would like to see the R^2 on his line as well, I think there might be a wonderful example of a high R^2 on a line that shows little to no actual correlation as presented.

The reason why price collapsed in 2015 is this: https://www.eia.gov/todayinenergy/detail.php?id=66025

Permian oil production growth creating a region that if it were an OPEC country, would be 2nd only to Saudi Arabia.
https://en.macromicro.me/charts/106023/opec-member-countries-crude-oil-production

As the Eagle Ford graph I presented demonstrated there is certainly a volumetric resource availability difference between $65/bbl and $125/bbl. More price = more oil on an asymptotic curve, I was always surprised peakers never brought even the most basic economically based resource availability arguments into their happy go lucky bell shaped curve days. The aggregate of many curves like this EIA one has ZERO requirement of being bell shaped in the aggregate result. In fact, this particular region...according to the EIA....has been basically flat since Covid.

Peakers fled the field of battle for a reason. They couldn't handle the economic relationship between oil production, oil price, and measures of economic availability at those prices, or others. 

In all fairness to the amateurs doing this work, they shouldn't feel too bad, the entire correlation/causation thing can be tricky. Particularly if intertwined with an economic component. So amateurs project into it things they want to see usually. 

Quote from: REBest economic forecasting I ever saw. 

Maybe. depending on the temporal component, as I mentioned earlier. Otherwise it is just line drawing to tell a story around. Did he happen to mention the "why" I just mentioned as well?

Quote from: REThe chance he was just "lucky" with a guess that far in advance is close to zero.
RE

Same as Hubbert it can be argued. For awhile. His chart shows the price collapse BEFORE he ran out of data, arguably he drew a line through it because it was historical, not a prediction. And the price is only for what, about 2019/2020? Project that red line out to the present and he is predicting $30 oil. Check WTI and let me know how low his prediction is today. Hell, he doesn't even label his chart as Brent or WTI for crying out loud.

WTI is about $57/bbl today. Brent is $60. So his guess sucks for 2025. Anyone who plays this game knows that straight lines don't usually work except in limited data regimes or after a data transformation of some type, and this is usually done as part of an argument. "I think oil will be $XX/bbl because.....<fill in the blank>". 

Pretty typical story telling from a data constrained perspective, with a veneer of "analysis" on top of it. Get all the data necessary to do it right, and then you can play in the big leagues.