Energy Information Administration is right to update its models 📈

Predicting the future is hard, but I think EIA can improve their forecasts

The Energy Information Administration — the independent statistical arm of the Department of Energy — is an incredible operation. They have data on everything, and they publish all of it. Government agencies could learn a lot from how they approach analysis, consistency, and data transparency.

They are also notoriously conservative (not the political kind), and, as a result, their forecasts are often way behind the curve. I’m guessing this is part of the reason why they recently announced they would be suspending their Annual Energy Outlook (AEO) in order to rebuild their forecast models.

Take liquified natural gas, for example. The LNG market has shattered their forecasts for years now, and it shows no sign of catching up.

I think it will be worth exploring which EIA model predictions have been most and least accurate over the years. The Congressional Budget Office does a similar exercise with their economic forecasts, and it’s a healthy thing for objective organizations to do.