Green, Richard G.¹
(1) LaRoche Petroleum Consultants, Ltd, Dallas, TX

ABSTRACT: Using History to Predict Future Product Prices

The history of the oil industry has repeated periods of both low and high commodity prices and boom or bust cycles. The actual price received for the product becomes the most critical factor in profitability once the hydrocarbon has been found. Unfortunately, it is the least understood and most non-technical factor. Most experts attempt to relate reserves (or perceived lack of reserves) to estimate future product prices. The author believes this is incorrect. Price is determined partially by supply and demand, and indirectly by reserves but most importantly by deliverability to the market. The author believes history can be a useful guideline in predicting future price trends and periods of boom or bust. Understanding these historical trends and creating company models of price prediction is as critical to making the correct business decisions as any reservoir model or probability methodology.

AAPG Search and Discovery Article #90026©2004 AAPG Annual Meeting, Dallas, Texas, April 18-21, 2004.