His seminal 1992 paper, “The Fog of Commerce: The Failure of Long-term Oil Market Forecasting,” explained the flawed thinking that resulted in forecasters repeatedly predicting prices rising roughly 3% per year above inflation. (Available here: )
His 2001 Oil & Gas Journal article, “A New Era of Oil Price Volatility,” described the microeconomics of the market suggesting that prices were more likely to be volatile in coming years due to factors such as lower spare crude production capacity.
Lynch has repeatedly been criticized for arguing against the belief that oil prices must inevitably rise over the long term. His 1989 Oil Prices to 2000 (Economist Intelligence Unit) suggested oil prices would not keep up with inflation during the 1990s, which the journal Petroleum Economist described as “heretical”. (The prediction proved correct.)
When prices began rising in 2003/4, he incorrectly believed the increases would not last, for which he took much criticism, especially from peak oil advocates who thought prices could not come down at all.
When prices spiked in 2008, shortly before the peak he published two pieces on marketwatch.com advising that prices would fall and describing which sectors would yield the best investment returns. (Here is part 1: and Part 2 here: ) Online comments ranged from derisive to insulting.
Lynch also suggested in recent years that a price of $50 was much more sustainable, rather than the prevailing consensus of $100. At OPEC in 2012, this prediction was treated as a joke and an oil company CEO implied Lynch was an idiot for such a perception. (About one hour in on this video: here)
Papers such as
In several research reports, he demonstrated that natural gas supplies are relatively cheap, even in the U.S., and do not require ever-higher prices to exploit them. He co-authored the supply chapters of M.I.T.’s International Natural Gas Trade Project with M. A. Adelman, which argued against the consensus that U.S. gas prices needed to rise by 5% per year (above inflation), saying resources were adequate to meet demand at 1985 prices. (In fact, prices fell sharply afterward, making the forecast better than most others, but still erroneous.)
“Asian Natural Gas: Boom and Bust?” in Energy Watchers VIII, The International Research Center for Energy and Economic Development, Boulder, Colorado, 1997.
M. A. Adelman, “Natural Gas Supply
to 2100,” International Gas Union, 2002.
Most recently, his 2013 Oil & Gas Journal article warned that then-elevated LNG prices were temporary, and that long-term prices might not support the optimistic expectations for U.S. LNG exports. The combination of new LNG supply and lower oil prices has brought Asian LNG prices down sharply, from $16/MMBtu after the Fukushima nuclear accident to roughly $8/MMBtu now, although the long-term impact on U.S. LNG exports remains uncertain.
Oil and gas supply
Economics of Petroleum in the Former Soviet Union,” in Gulf Energy and the World:
Challenges and Threats, The EmiratesCenter for Strategic Studies and
Research, Abu Dhabi,
Oil Supply: Theory and Practice,” Quarterly Review of Economics and Finance,
Peak Oil: In 1995, a published paper explained that resource-based oil supply models, such as those relying on the Hubbert Curve, were flawed because the recoverable resource tends to increase over time, requiring the predicted peak to be repeatedly moved higher and further out. A 1997 Oil & Gas Journal article, “Fixed View of Resources “ criticized the pessimism of some analysts, arguing that a variety of factors, including technological advances, were constantly increasing the amount of oil and gas that could be recovered.