In my list of Top 10 Energy Related Stories of 2010, I made three predictions for 2011. Those predictions were:
- I believe high oil prices will continue to put a strain on the economies of oil-importing nations.
- I expect that we will see oil prices once again head above $100 per barrel, although I expect the annual average for 2011 to be below $100 because of sluggish economies.
- I also expect that the bills are going to start coming due for some of the high profile ‘next generation’ biofuel producers, and that we will see bankruptcies from some of the companies I have discussed in this column.
In hindsight, those predictions look pretty tame. However, bear in mind that oil had spent all of 2010 below $100/bbl, and a number of analysts were predicting falling oil prices in 2011. At the time I made that prediction in December 2010, oil prices had been creeping higher, and had climbed to $90. By the first week of March 2011, oil had reached $100. However, the price did average below $100 as I predicted.
I should have been more specific though. Usually, when I refer to oil prices I am talking about West Texas Intermediate, the primary benchmark crude in the U.S. But it isn’t necessarily the most important benchmark in the world. Brent crude oil is an important benchmark for petroleum prices in Europe, Africa, and the Middle East — and Brent was priced above $100 for most of the year.
When I made my prediction of bankruptcy for some next generation biofuel producers, I was specifically thinking of two companies. One was Range Fuels, and only a couple of weeks after I made that prediction, the news came out that Range Fuels was out of money. The bills did come due, they could not pay them, and they ultimately went into foreclosure. There were several high-profile bankruptcies in the renewable energy sector, most notably Solyndra, and the government began to feel the fallout when these companies could not deliver on the hype they created. (I won’t yet mention the second company I was thinking might go bankrupt in 2011, but I do not think they have a chance of staying in business over the long haul with their current business model. It is a company I have written about several times.)
So, for the second year in a row, I would say that my predictions were accurate. My predictions for 2010 were:
- China’s moves are going to continue to make waves
- There will be more delays (and excuses) from those attempting to produce fuel from algae and cellulose
- There will be little relief from oil prices.
Those predictions, however, leave much more room for interpretation so I tried to be more specific with my predictions for 2011. In the next post I will list my Top 10 Energy Stories of 2011, and I will give predictions for 2012.
Link to Original Article: Grading My Predictions for 2011