Heisenberg, Murti and Oil

The more precisely the position is determined, the less precisely the momentum is known in this instant, and vice versa.
--Heisenberg, uncertainty paper, 1927

To paraphrase this statement, the current state and movement of something cannot be determined precisely and more precise the tool of observation (read high frequency radiation), the greater would be its impact on the particle's current position/momentum thereby changing it.

Mapping this to predictions; Predictions (can) impact what they predict.


Goldman Sachs analyst Arjun Murti predicts that oil will trade at 200$ in a year or two time frame. Having successfully predicted the oil spike that took it beyond $100 from a meager 40 a year before, Mr Murti is no longer a regular guy but carries a lot of weight.

Since its him, would market take heed to what he is saying and react to it thereby creating a self serving cycle of spikes and super spikes making his predictions come true.

Or on the contrary, would it make the consumers wiser since they can sense further strengthening of prices and hence start cutting their demands, and in the process making the prediction wrong?

While there are can be several possible reactions to Mr Murti's statements which are as difficult to predict as the oil price, I wonder if he should start taking into account the effect of his predictions while coming up with them. Or who knows, being the smart cookie he is, he may already be doing it!

Comments (2)

I was just trying to think through as to which of the arguments you mentioned looks promising. Given the stature and following Murti commands, let's say people take his predictions to be accurate. Now that means that one would tend to think that the surge in oil prices is here to stay for sometime, which would translate into a change in people's behavior by cutting on their oil consumption and dependencies. In the absence of his predictions(and similar predictions by heavyweights like him), one would tend to think that the surge is temporary and would not necessarily alter the decisions (like buying a car) too much. However, I think such predictions would make people(general mass I would say as some of us may have our own set of reasonings) alter their behavior resulting in a lessening of demand which ultimately would pull down the oil prices.

I was just wondering, would the stature and following of Murti actually work against him? I guess so. Let's see how it goes.

We won't know until it happens, its just wait and watch. However, Murti after his prediction of 200$ also predicted that the demand supply equation will force the oil to 75$ in two year timeframe. Let's how accurate his prognosis is.