Thursday, July 9, 2015

NEWS  |  Kemp: Data Availability Bias in the Oil Market  |  Rigzone

NEWS  |  Kemp: Data Availability Bias in the Oil Market  |  Rigzone: "Why is there such good data about oil in the United States but such poor data about everywhere else? Accurate information is essential for good decision-making, so it is remarkable how little reliable and timely data exists about the production and consumption of crude oil and refined fuels outside the United States. The situation in the other advanced economies, not to mention emerging markets, is mostly guesswork. The result is that oil analysts cannot even agree on production and consumption yesterday and today, let alone predict what will happen tomorrow. And because the best and most readily accessible data is for the United States, the market puts excessive emphasis on what happens there and neglects developments elsewhere. The obsession with weekly rig counts, production estimates and crude inventories in the United States as a sign of wider supply-demand trends in the oil market has been a case in point. But as long as U.S. data is more accurate, detailed and timely than the numbers for other countries, this example of "availability bias" is set to continue. Energy Crisis Some U.S. data comes from private companies such as Baker Hughes, which inherited the decades-old rig count from the Hughes Tool Company, but most is produced by the federal government. The U.S. Energy Information Administration, the independent statistical and analysis arm of the Department of Energy, provides by far the best data on oil and other energy markets anywhere in the world."

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