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How Big Oil gets its projections wrong-II: How far out of sync are they?
May 16: The website carries here a very interesting insight into how big oil companies' prediction model works.
8Most companies follow a highly quantitative approach as it  it allows investments to be modelled and measured.
8But herein lie forecasts’ weaknesses too: they give a false feeling of predictive rigour.
8By relying on extrapolation, they must make (often subjective) assumptions about which trends will wither, persist or accelerate, while the inertia of the whole system – expressed in slow-changing aggregate numbers – may mask important underlying trends.
8Exxon Mobil for example predicted that the share of primary fuels in world energy matrix will remain the same but it did not.
8When it comes to the wider energy mix, oil companies see the future being very like the present.
8And clearly, the models used have thrown up the wrong kind of results.
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