Predicting oil prices is a mug's game

We often talk about labor constraints, but there are many infrastructure bottlenecks such as things identified in this email in the last year – the aging locks on the inland waterways or pipelines that are under capacity.  Here is a constraint that just surfaced – very large crude carriers (VLCC) can’t get into Gulf ports.  We have to use smaller, less efficient ships.  To overcome this problem, three U.S. energy logistics firms – Buckeye Partners, Phillips 66 Partners, and refiner Andeavor – formed a joint venture to build a terminal for handling VLCC’s at the port of Corpus Christi.
 
Headline in the Wall Street Journal:  No one is more surprised by $75 [Brent] oil prices than Wall Street’s oil experts.  Crude is up 12% this year.  University of Houston Finance Professor Craig Pirrong:  “Predicting oil prices is a mug’s game. The inelasticity of supply and demand mean that the price is very sensitive to random shocks that are themselves hard to predict.”  Remember that when finance asks for fuel surcharge projections!