When people who follow the oil industry try to look ahead most of us, I think it’s safe to say, do so with vision that is often predicated on (and perhaps impaired) by powerful assumptions. Commentary on where oil and gasoline prices may be going is easy to find; but what’s difficult is finding credibility that emerges from conviction and that can only materialize when we have proof that our assumptions are correct.
Last month the U.S. Dept. of Energy’s Energy Information Administration published its 2012
DOE Annual Energy Outlook & Forecast to 2035. If you're expecting to find insight on how the government looks ahead, you'll be disappointed.
According to the DOE, “the projections in the U.S. Energy Information Administration's (EIA's) Annual Energy Outlook 2012 (AEO2012) focus on the factors that shape the U.S. energy system over the long term. Under the assumption that current laws and regulations remain unchanged throughout the projections, the AEO2012 document provides the basis for examination and discussion of energy production, consumption, technology, and market trends and the direction they may take in the future. It also serves as a starting point for analysis of potential changes in energy policies.”
There's no question that it's a substantial document. But oddly enough, that may be troubling to people looking for the government’s definitive perspective on energy. You won’t find it here.
The document explores 29 assumptions. And one might think that should pretty much cover what’s necessary. But while it touches on oil price and production trends, the impact of CAFÉ standards and the changing structure of the refining industry, for instance, it seems to contain its assumptions in a vacuum.
It does not weigh OPEC’s influence on the U.S., or account for growing imports from non-OPEC nations either. Perhaps it’s not designed to speculate on the impact of China’s massive investment in Canadian oil and what that might mean to the U.S… But if that is the case, why entertain some lesser assumptions while ignoring major developments?