How Much Oil Do We Really Have ?  

Adam Porter has a new article up at the BBC looking at data quality issues for oil reserves and demand numbers.

As oil prices remain volatile the markets do their best to forecast future prices. Unfortunately this is not an easy task. While it may appear extraordinary to outsiders one of the main problems in the oil market is the reliability of basic statistics. The oil industry calls the problem 'data transparency'.

As an example this week is a 'revision' to oil demand growth in the United States in 2004. Previously the growth in oil demand was thought to be 2.4%, about 484,000 barrels per day. In fact it was 697,000 barrels per day or 3.5%. That is in fact 46% more than was previously stated - a huge revision.

"Oil market data is generally a black artm like using a set of chicken bones," says Paul Horsnell of Barclays Capital. "If Columbus had thought he'd hit India when in fact he was in the Caribbean, that's about the level of oil market data."