Lynch,M.C.(2002): Forecasting oil supply: theory and practice. The Quarterly Review of Economics and Finance, 42, 373-389.


1. Introduction
2. Price forecasting: the 3% rule
3. Historical supply forecasting
4. The nature of the errors
5. Geophysical models
6. Methodological errors
7. Depletion effect
8. Economic models
9. A simple supply model (and its shortcomings)
10. Dummy variables
11. Returns to drilling: unfortunate convergence
12. Aggregation

13. Conclusions
 Most oil supply forecasting has been done very badly in the past, with many models severely underspecified. Although geology is an important determinant of discovery rate, the tendency of some modelers to interpret all supply behavior as being geologically determined is impossible to justify. And even where the models appear to be correctly specified, the results still prove to be too pessimistic, suggesting there is some remaining bias at work.
 This article is of necessity much too brief to describe all of the many difficulties in analyzing and forecasting oil supply, let alone cover all aspects of the debate on the issue - the breadth of the errors, the misleading semantics, and so forth. Indeed, one of the best pieces of evidence of pessimistic bias is simply the overwhelming number of forecasts that have been produced - many from models whose design appears accurate - but which proved not only wrong, but embarrassingly too low. That many of those modelers have generated new forecasts which are nearly identical to their old ones without explaining the cause of the previous errors should make even the most casual observer skeptical.』