Arlequin

The Price of Oil

I want to write about the price of oil. This is a very difficult problem because the price fluctuates dramatically. The purpose of curve fitting is to make inferences about future prices. If you don't have a good model to fit with, the results are, if not precisely worthless, of diminished value.

In this article:

http://ourfiniteworld.com/2014/03/21/oil-limits-and-the-economy-one-story-not-two/

Although Gail Tverberg hints at a model for future oil prices, she never actually comes out and says what that model is.

This is my best stab at a price model based on her framework. This model is an addition of a hyperbolic fit and a cosine wave. I have noticed that the prices are moving cyclically since about 1973. Prior to that the price was relatively stable.

The correlation coefficients are not giving a decisive read on which curve better describes the data.