EIA: Making the same mistake again and again
If you believe the Energy Information Administration, U.S. gas prices will peak at $4.15 per gallon in August.
Whew. That’s a suprise for most Americans, 86 percent of whom believe that prices will top $5 by the end of the year. We can be confident that the EIA — the agency that does the country’s official projection of oil prices — knows what they’re talking about. Yessiree.
If you detect a note of sarcasm in my post maybe that’s because the EIA has a hilarious record of forecasting world oil prices. And even when it comes to domestic gasoline prices, it’s as if their forecasts are completely impervious to reality. To wit:
- In February, the EIA forecast that prices would peak at $3.40 in the spring.
- In March, they forecast that prices would peak at $3.50 in the spring.
- In April, they forecast that gas prices would peak at $3.60 in the spring.
- By early May, prices were at $3.57 and climbing, so the new official projection said that prices would peak this month, in June, at $3.73.
- By late May — just weeks after the new forecast — the average price was already at $3.94. And yesterday’s national average gasoline price was $4.04. So now they’re saying that prices will peak in August, at $4.15.
In fairness, maybe the EIA will get it right one of these days. Maybe gas prices will peak and start descending back to earth.
On the other hand, it’s been reported that global oil production actually fell in 2007, despite record high prices. Less supply will, of course, tend to exert an upward pressure on prices. And it’s getting a little hard to take the EIA seriously when they keep making the same mistake again and again and again and again …
If anyone wants to bet with me on August gas prices, I’ll be taking the "over."