The perils of the prediction business

Econbrowser reminds us of just how difficult it is to get a handle on how high oil prices might go.

Oil 'will hit $100 by winter'
Worst-ever crisis looms, says analyst · Surging demand to keep prices high
Heather Stewart, economics correspondent
Sunday July 3, 2005
The Observer

Oil prices could rocket to $100 within six months, plunging the world into an unprecedented fuel crisis, controversial Texan oil analyst Matt Simmons has warned.
After crude surged through $60 a barrel last week, nervous investors were pinning their hopes on a build-up in US oil-stocks to depress prices in the coming months.

But Simmons believes surging demand will keep prices bubbling well above $50. 'We could be at $100 by this winter. We have the biggest risk we have ever had of demand exceeding supply. We are now just about to face up to the biggest crisis we have ever had,' he said.

Opec producers held emergency talks last week to consider making their second 500,000 a barrel increase in production quotas in a fortnight: but the discussions were suspended last Thursday after prices dipped back below $60.