Western Europe's energy policy, prices and forecasts, 1955-75.

The 1955-1975 period was one in which substantial economic growth occurred in Western Europe; growth which was aided considerably by relatively cheap energy in the period to 1975. Throughout the period, the methodology of energy demand forecasting developed with improvements in the data base, sector analyses and more explicit forecasts linked to country and world economic forecasts. However, the experiments with mechanistic methods of forecasting proved disappointing. A detailed study made of the precision of the many forecasts published provides guidelines for assessing the reliability of current forecasts. This experience however is best used to supplement the knowledge of the uncertainties inherent in current forecasts and should not be used in a purely mechanistic way. From a study of the relationships existing between macroeconomic variables and energy consumption, the problems in using these relationships for energy forecasting are highlighted. Energy price formation is shown to be a function of the world energy environment in spite of European governments' ambitions to closely control energy prices as an integral part of their energy policies. In this connection, the importance of the Rotterdam oil products market and its influence on individual countries' energy prices was studied in depth