COMPARATIVE ANALYSIS OF1985 OIL FORECASTS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80M00165A000300200006-4
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• Document Page Count: 8
• Document Creation Date: December 15, 2016
• Document Release Date: February 19, 2004
• Sequence Number: 6
• Content Type: MF

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r Executive Registry
MEMORANDUM FOR: Director of Central Intelligence
VIA Deputy Director of Central Intelligence
FROM Sayre Stevens
Deputy Director for Intelligence
SUBJECT Comparative Analysis of 1985 Oil
Forecasts
1. Action Requested: None.
2. Background: The attached memorandum compares
CIA and of e
nergy forecasts. It was prepared by
De
ut
Di
p
y
rector of Economic Research
in
,
-Lespunse o your request. It concludes, early press
reports notwithstanding, that the forecasts are not all
that far apart.
The press reporting on the Soviet estimate sparked
a visit to from Stan Taylor, Select
Committee Staffer, who was charged with writing an
evaluation of the Soviet paper as part of the Committee
study on the quality of intelligence analysis. Taylor
told I that when he got the assignment, he called 15 or
so experts in the energy area, all of whom thought the 1985
study was outstandin . This unanimity surprised Taylor,
as it did indeed You will, of course, receive a copy
of Taylor's repor , which, if he has his way, will be
fairly glowing.
Finally, 0 had a one-hour+ meeting with Jim
Schlesinger at the White House -- one of several such
meetings -- last Friday night, and, apropos of this
memorandum, Schlesinger thought that our study might be
too optimistic than pessimistic as press reporting has it.
agreed that if we are wrong, it will be because we
are too sanguine on a number of points.
/:;i,/) "0UG
Sayre Stevens
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,mwe NOW
SUBJECT: Comparative Analysis of 1985 Oil
Forecasts
The DCI requested that I prepare a memorandum
on a comparative analysis of 1985 oil forecasts.
Deputy Director
Economic Research
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Comparative Analysis of 1985 Oil Forecasts
A comparison of the CIA projections of worldwide energy/
oil supply and demand projections with recent forecasts of
other organizations reveals few major differences outside
the Communist area. These are largely because of a lack of
understanding of Soviet oil production problems. Most
private, oil industry, and government forecasters generally
agree that demand for OPEC oil will exceed OPEC's ability or
willingness to produce by 1985 or shortly thereafter. In
addition to the studies analyzed below, informal discussions
with other observers indicate that the CIA analysis is
looking stronger after nearly two months of reflection.
A large number of major worldwide energy supply and
demand forecasts has been published during the past six months
or so. The attached tables compare the principal findings
in the CIA 1985 forecast with nine representative studies.
Comparable details are not available for several of the
studies, although estimates of required OPEC production
(so-called "bottom line") are indicated for each.
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The CIA forecast and methodology are most closely
paralleled in studies prepared by
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by projected economic growth, less estimates for conservation.
On the supply side, the CIA projections are based on an
analysis of available non-OPEC energy supplies, including the
Communist countries; OPEC countries garner the residual to
meet world demand. CIA's forecast of required OPEC production
in 1985 is higher than the other four studies, primarily
reflecting our more pessimistic assessment of the Soviet
oil balance. The difference in the-Soviet estimate alone is
as large as 3.1 million to 5.5 million b/d in 1985.
Two additional studies -- by Walter J. Levy Associates
and the International Energy Agency -- conclude that required
OPEC production in 1985 may well exceed OPEC willingness to
produce at the required level. The Levy and IEA studies each
assume the Communist countries will be small net exporters in
1985.
The SRI World Energy Study is heavily caveated. For
example, summary results distributed at the second conference
of participating clients held at SRI on April 21 are carefully
labeled "Preliminary Work (to be revised)" and state that
"numbers are for illustrative purposes only." Nevertheless,
people are quoting the study as definitive when they contrast
it to the CIA. analysis.
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Remarks :
The Director
Attached is the response to
your request for a comparative analysis
of 1985 oil forecasts. You might wish
to note this before the Wednesday
luncheon.
Sayre Stevens
DDI
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DD/OER 4-F-18 6 Jun 77
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