Crude Oil and Motor Fuel: Fair Price Revisited
In April 2009, we introduced a model representing the evolution of motor fuel price (a subcategory of the consumer price index of transportation) relative to the overall CPI as a linear function of time. Under our framework, all price deviations from the linear trend are transient and the price must promptly return to the trend. Specifically, the model predicted that “the price for motor fuel in the US will also grow by 50% by the end of 2009. Oil price is expected to rise by ~50% as well, from its current value of ~$50 per barrel.” The behavior of actual price has shown that this prediction is accurate in both amplitude and trajectory shape. Hence, one can conclude that the concept of price decomposition into a short-term (oscillating) and long-term (linear trend) components is valid. According to the model, the price of motor fuel and crude oil will be falling to the level of $30 per barrel during the next 5 to 8 years.
Modeling the Price of Crude Oil and Motor Fuel: A Five-Year Revision
We present a five-year revision of an empirical study started in 2007. Seven years ago, we found two three distinct periods characterized by sustainable linear trends in the difference between the headline consumer price index (CPI) and the core CPI in the USA. Then we revealed similar behavior in the differences between the CPI and indices of various consumer expenditure categories. We estimated the duration of these trends which varies in a wide range from 5 years to more than 20 years. The transition periods to new trends span shorter intervals of 2 to 5 years. The transition is characterized by a higher level of volatility in the studied CPI differences. In April 2009, we introduced a simple quantitative model representing the evolution of motor fuel price (a subcategory of the consumer price index of transportation) relative to the core CPI as a linear function of time. Under our framework, all price deviations from this linear trend are transient and the price must return to the sustainable trend. The model predicted that oil price would fall to $30-$60 per barrel in 2016, which is very close to the current price. The behavior of actual oil and motor fuel price since 2010 has shown that this prediction is accurate in both amplitude and trajectory shape – a good support for the credibility of our empirical mode. We conclude that the concept of price decomposition into a short-term (oscillating) and long-term (linear trend) components deserves a deeper theoretical consideration of the driving forces behind linear time trends and can be used as a workhorse for a wide spectrum of commodity investors. According to the model, the price of crude oil will be falling to the level of $30 per barrel during the next 6 years and motor fuel will follow up the oil price. Moreover, the periodicity of the related normalized difference indicates that this low-price level may extend into the second half of the 2020s. The secular fall in energy prices may induce a lengthy period of very low inflation.
CLINICAL TRIALS OF THE ABDOMINAL LEFT VENTRICULAR ASSIST DEVICE (ALVAD): PROGRESS REPORT.
An abdominal left ventricular assist device (ALVAD) is undergoing controlled clinical trials in our institution. The ALVAD is pneumatically-actuated, synchronously or asynchronously with an external console and is interposed between the apex of the left ventricle and the infrarenal abdominal aorta. It is an order of magnitude more effective than conventional intraaortic balloon pumping. Thus far, we have implanted this pump in 21 patients (15 males and six females). The average age has been 50. The duration of cardiopulmonary bypass with intensive pharmacologic support and IABP until ALVAD implantation has been nearly 4 hours. The plasma hemoglobins prior to ALVAD implantation have averaged 168 mg%. The platelet counts at implantation have averaged 68,000 mm(3). The average duration of ALVAD support has been in excess of one day and the longest trial extended for one week. We have been able to remove the pump after ventricular recovery in two instances and effected cardiac allografting in one instance of ALVAD dependency. We have found that (1) the profoundly depressed left (and right) ventricles can recover if totally supported with this device; (2) the device can function in the presence of ventricular fibrillation and/or standstill; (3) the device can effectively replace both left and right ventricular function in the presence of normal pulmonary vascular resistance and microcirculatory hemodynamics; and (4) in the presence of impending multiple organ failure, procrastination in use is to be avoided.