In September 2022 the US EIA expected gas at $6.01 for 2023. The outcome: $2.53, 2.4 times lower
US gas (Henry Hub), $ per million Btu, 2023 average
The forecast for 2023 moved with the price: $3.63 in January 2022, $6.01 in September 2022, $4.90 in January 2023. The January forecast of the current year came within 5% of the outcome 1 time in 14.
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Every month the US Energy Information Administration (EIA) publishes its Short-Term Energy Outlook for this year and the next: the prices of oil, gas and gasoline. Here: the forecast of the annual average price.
Across: when each forecast came out. Blue: the forecast of the 2023 average price in each monthly issue (first a year ahead, then for the current year); orange: the outcome. The shading is the error.
- Forecast for 2023, January 2022
$3.63
- Forecast for 2023, July 2022
$4.76
- Forecast for 2023, September 2022
$6.01
- Forecast for 2023, January 2023
$4.90
- Forecast for 2023, July 2023
$2.62
- Forecast for 2023, December 2023
$2.56
- Outcome: 2023
$2.53
The price table of each monthly Short-Term Energy Outlook (24 issues with a forecast for 2023); outcome: EIA’s annual average price. The largest misses of a next-year forecast since 2001 (without the pandemic years 2020–2021), one per year, both directions: up to three for oil, one for gas. The January forecast of the current year (2011–2025): above the outcome 8 times, below 5.
The chart shows the forecast for the year moving with the price: it showed a sharp turn of the market once the turn was under way. The other largest misses go both ways: oil for 2009, the forecast 2.1 times above the outcome; oil for 2005, the forecast 2.0 times below the outcome; Brent oil for 2015, the forecast 2.0 times above the outcome.
A question for this picture
If a year-ahead price forecast moves with today’s price, what does it add to it?