Estimation of Past Oil Price

Question

What's up people? So I found a very unusual estimation task about oil prices. However, it refers to the past:

"Estimate the change in the price of oil in the year 2000 from today’s price. Will it increase or will it decrease?" (No more information provided)

What could a possible structure look like? I tried with demand and supply as well as with global economy welfare but can't come up with something that makes sense.

Answer 1

Hi,

I would split into buckets and try to understand a trend in each of them:

Demand

Lack of internal resources (lack of researched volumes, extraction capabilities, higher costs)
Private consumption (Climate - heating and cooling, car ownership and usage, etc)
Industrial consumption (Growth and structure of the economy)
Alternative energy resources (Availability and adoption)

Supply

Oil&Gas resources availability (volumes, quality)
Cost of extraction (Labor, Taxes, Licenses, Technology)
Cost of transportation (Location, supply chain infrastructure, taxes and quotas)

Externalities

Regulatory organizations (e.g. OPEC)
Conflicts in the Middle East
Trading and speculative demand

Best!

Answer 2

Hello!

Agree with Vlad´s framework of doing the overal Supply-demand and breaking it into little pieces -altough it has the risk of not being MECE, but it´s very complicated not to be so here-.

I would add in the external factors some more such as (1) international trading tensions/conflicts or (2) wars -that affect not only the supplying regions but also the transport, or any other political factor that can make a difference.

Hope it helps!

Cheers,

Clara

Answer 3

Hey! I have 2 cases which are related to the oil&gas industry (although I think even if you apply in a very oil depen... (read entire answer)

Hey! I have 2 cases which are related to the oil&gas industry (although I think even if you apply in a very oil dependent nation, you can expect any kind of case): Oil Co is... (read entire answer)

Answer 4

Hi Marilena, good question. I would always structure such a case completely top down. E.g. in your case, start wi... (read entire answer)

Hi Marilena, good question. I would always structure such a case completely top down. E.g. in your case, start with the population, then % of people needing glasses, % of th... (read entire answer)

Answer 5

No expert by any means but in an estimation question is always good to end with a sanity check. In this case, the sa... (read entire answer)

No expert by any means but in an estimation question is always good to end with a sanity check. In this case, the sanity check could be that according to Dominic Barton (McKins... (read entire answer)