by ROCKMAN » Thu 02 Apr 2015, 08:38:31
Apollo - "The model is clearly missing the shale boom of the last couple of years." I won't pretend to be a Loglet analysis expert but the link seems to do an excellent job of explaining why the methodology missed the shale boom: “World petroleum extraction is most likely following a multi-cycle logistic process.” IOW the method essentially reverse engineers the dynamics to explain the plot the production curve AT THAT POINT IN TIME. IOW if a significant a change in the dynamics (such as the shale boom) DOESN'T kick in the Loglet analysis will do a fine job of projecting the future just as it has done for the other “multi-cycles”...once the Loglet model was adjusted for those different cycles. All the past data fits look good because they include adjustments to the logistic curve based upon those changes.
Just as the conclusions of the article states: “Any proper forecast based on the results presented here must therefore consider the existence of these other cycles, and that their trajectory might at this stage be still largely unknown.” IOW if the dynamics don’t change from the last iteration of the Loglet analysis then it will do a great job of predicting the future. But if the dynamics do significantly change, as happened with the shale boom created by high oil prices, the Loglet model won’t be worth a sh*t…just like it hasn’t for the last 8 years.
I paraphrase their words, of course. LOL.