February 2008

Management

Why many experts are wrong in forecasting capital investments and other emerging events

The challenge for HPI managements competing for superior foresight is to create hindsight in advance

Chevriere, J. P., Munisteri, J. G., Transmar Consult Inc.

Samuel Goldwyn, the Hollywood tycoon and founder of the MGM film studio, once acidly remarked that "a smart businessman should never make predictions, especially about the future." This piece of wisdom, unfortunately, is more honored today in the breach than in practice within the oil and gas industry. Time after time, wrong-headed forecasts are developed and distributed by leading public and private institutions such as the International Energy Agency, the US Department of Energy (DOE), Cedigaz, and leading research and investment banks. Subsequently, year after year, managements pay up and use these forecasts within their companies, never dissuaded by their inability to ever hit the mark

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