Building a Consensus Forecast for Crude Oil Prices

<p>Skyrocketing fuel prices have stressed the Department of Defense's budget in recent years. In 2001 the DoD spent $4.7 Billion on fuel with the Air Force consuming $ 2.7 Billion (GAO 2001). These figures have grown over due to these increases as well as the increased flying ours to support the Global War On Terror. In fact the Fiscal Year 2007 budget has already been increased by $1.1 billion or 1% of the total budget to accommodate the increased price of fuel (SAF/FMB 2006). Current forecasts of this resource have yielded poor results impairing the DoD's ability to budget this critical expense. Further because the forecast are poor strategic hedging strategies cannot be effectively employed. Because fuel is a significant portion of aircraft operations and maintenance cost it should be considered in the acquisition of new systems but the current forecast have not provided the accurate data required. Current forecast available to the DOD were examined and compared to two econometric structural forecast models. The performance of these structural models was then compared to the benchmark forecasts for energy provided by the Energy Information Agency. A consensus price forecast was constructed from these alternative forecasts.</p><p>This work has been selected by scholars as being culturally important and is part of the knowledge base of civilization as we know it. This work was reproduced from the original artifact and remains as true to the original work as possible. Therefore you will see the original copyright references library stamps (as most of these works have been housed in our most important libraries around the world) and other notations in the work.</p><p>This work is in the public domain in the United States of America and possibly other nations. Within the United States you may freely copy and distribute this work as no entity (individual or corporate) has a copyright on the body of the work.</p><p>As a reproduction of a historical artifact this work may contain missing or blurred pages poor pictures errant marks etc. Scholars believe and we concur that this work is important enough to be preserved reproduced and made generally available to the public. We appreciate your support of the preservation process and thank you for being an important part of keeping this knowledge alive and relevant.</p><br>