Despite many journal articles, forecasting models, and books, little is known about the actual quantitative value, or cost to society, of oil shocks. The potential consequences of any specific political or economic disturbance are unclear and depend on the market conditions and the exact nature of the supply shock. Forecasting is complicated by forecast bias and the reliability and availability of data and statistics, raising several important questions:
- What key market characteristics determine the stability of world oil markets?
- What are the main sources of uncertainty currently reigning over world oil markets?
- How high (low) do inventories have to be before world oil markets are over (under) supplied?
- What is a reliable, unbiased, way to model uncertainty in world oil markets?
- Is there a human factor in the stability of world oil markets? Has the role of policymakers changed significantly in the past decade?