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Planning for Chaos: A Scenario Approach to the Oil Market
No one can forecast oil prices. Yet a sharp change in oil prices can radically alter business conditions for a very large number of companies. In the early 1980s, automobile companies, iron and steel companies, airlines, marine transportation companies, and ultimately financial institutions all suffered whiplash from steep increases in oil prices. Since prices collapsed in 1986, we have enjoyed a period of relative calm, but the possibility of further turbulence remains with us. That possibility, although not forecastable, is nonetheless critical to business planning.
No one can forecast oil prices. Yet a sharp change in oil prices can radically alter business conditions for a very large number of companies. In the early 1980s, automobile companies, iron and steel companies, airlines, marine transportation companies, and ultimately financial institutions all suffered whiplash from steep increases in oil prices. Since prices collapsed in 1986, we have enjoyed a period of relative calm, but the possibility of further turbulence remains with us. That possibility, although not forecastable, is nonetheless critical to business planning.
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