The big news these days is the budget impact the low oil price is having on North Dakota. It’s a symptom of an old problem, those forecasting for oil markets is notoriously bad. The article linked below is a comprehensive look at the oil industry and the markets that shape the pricing. It’s an interesting read, but the most telling quote comes at the end from Colorado analyst Philip Verleger.
“Producing countries understand that oil not produced today may never be produced,” Verleger told Quartz. “Saudi Arabia was the first nation to come to this understanding. In response, they and other countries have acted to make sure their low-cost oil is produced first while the high-cost oil in nations such as Venezuela and Canada are left permanently in the ground.”
The markets will always be hard to forecast, but if the attitude characterized above is accurate, it represents a shift towards urgency and uncertainty that will make the prognosticating all the more difficult.
Read the full article from Quartz below.