Looking back at long-term energy forecasts from the early 00′s, it’s astounding just how much analysts got wrong – or perhaps more accurately, how little they got right.
Policy analyst and scientist, Vaclav Smil, who currently serves as Professor Emeritus of the Environment at the University of Manitoba has long criticized long-range energy forecasts. “Long range energy forecasts have missed every important shift of the past two generations,” Smil noted in a 2000 analysis of long-range energy forecasts since the 1970′s. “No truly long-range forecast can be correct in all of its key aspects; most of the forecasts will be wrong in both quantitative and qualitative terms,” Smil added.
It’s worth noting that long-range energy forecasts are a relatively new phenomenon, with the first of such forecasts appearing merely a generation or so ago, during the oil crisis of the early 1970s. Since the beginning, they’ve never been the most accurate, and even the analysts responsible for energy forecasts will admit that long-term predictions are often off base. One expert went so far as to call them “no better than fairy tales.”
But because energy prices can have such a profound impact on consumers, when analysts make predictions about the future state of energy, people are bound to listen even if the reality turns out to be far different from what was initially predicted, and unfortunately, long-range energy forecasts can have a big impact even when they aren’t accurate.
So why do long-term energy forecasts fail? Why are energy experts stumped by long-range predictions? We offer five reasons cited by both analysts, such as the Energy Information Administration (EIA) and scholars alike.