Long Range Forecasting of Foreign Oil Price Technique and Results
Authors: Tewksbury James G. 
Published: December 2007

Society of Petroleum Engineers 6200 North Central Expressway Dallas, Texas 75206
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American Institute of Mining, Metallurgical, and Petroleum Engineers, Inc.

Abstract
A practical general approach to forecasting foreign oil prices to the year 2000 is described, which includes both non-market and market influences and their relative importance. Using the approach, actual prices are projected, and an estimate of possible range of variation from the forecast is given. Also, forecasts of other are discussed.
In essence, foreign oil prices, expressed in constant 1975 U.S. dollars per barrel, are projected to decline somewhat by about 1985, projected to decline somewhat by about 1985, and then to rise sharply as the end of the century approaches. The possible percentage variations from the projections are large early in the period, and, surprisingly, are expected to decline later in the period.

Introduction
When I say long range forecasting, what I mean is to the year 2000, or about a 25-year forecast. I think I hardly need to mention the hazards and uncertainties in long range forecasting, especially today and especially in energy. About the only type of forecasting I consider more hazardous is very short range forecasting, because in that kind of forecasting people still remember what you said when it people still remember what you said when it doesn't happen.
In the next quarter century, I expect foreign oil prices to be determined by a number of different major influences which vary substantially in importance with time. Putting this thought another way, I don't think that there is any single forecasting approach which will work over such a long period of time.
For lack of a better term, I have chosen to classify future influences on foreign oil price into two major groups. First, there are price into two major groups. First, there are what I would like to call conventional market factors, which are the usual supply and demand factors which influence price in a competitive, unconstrained market. These include, for example, such factors as the downward influence on demand of an increase in price. second, there are what I would like to call non-market factors. These include all the other influences on price, such as political, military and financial influences, as well as competitive restraints such as cartels. Some economists might prefer to use the term exogenous factors instead of non-market factors. In general terms, at present and for about the next ten or so years, I see these latter, non-market influences dominating foreign oil price. Then, later in the century, I see the influence of conventional market factors increasing, but with non-market influences still substantial.
The great and continuing importance of non-market factors, which are virtually impossible to quantify, has, in my view, made precise modeling and computer techniques for forecasting of foreign oil prices impractical. I am not trying to belittle the usefulness of quantitative techniques for evaluating conventional market influences, or for evaluating some specific non-market influences.