Publications: Notes at the Margin

Consistency (September 19, 2016)


"Consistency is the hobgoblin of little minds." Ralph Waldo Emerson wrote those words in 1841. Brilliant scientists and individuals who believe they are brilliant have been quoting them ever since. Consistency in data collection, though, is essential for the successful operation of businesses and the economy. Refinery operators need consistent measurements. Pipeline operators require consistent measurements. Airline pilots require consistent measurements to avoid catastrophes. Investors, too, require consistent information. Imagine the consequences if companies fabricated data. Wait, one need not imagine. Do the names WorldCom and Enron ring a bell? Economic planners also require consistent data. Problems occur if these are just so many random numbers. Problems will even occur if the individuals and agencies conclude it is necessary to revise data to account for changes in the character of growth or, worse yet, do not update historical data to make it consistent with such changes.


Reporters, analysts, and publications that follow the oil market publications are at the mercy of the EIA and other agencies that report supply and demand and inventories. In particular, the increase in global demand through 2016 has been overestimated while increases in stocks may have been underestimated. Looking forward, the anticipated rise in the global surplus may not occur. Those who buy, sell, and trade oil have been misled by bad data. Serious losses have been incurred.


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