FLEXIBILITY IN DESIGN - Title Page - MIT

de Neufville + Scholtes D R A F T September 30, 2009Average Annual Crude Oil Price$120.00$100.00Price (USD)$80.00$60.00$40.00$20.00$0.001946195019541958196219661970197419781982198619901994199820022006YearsNominal Inflation Adjusted 2007Figure 1.1: Historical prices of crude oil, both in nominal and constant value dollars.Notice how the ‘trends’ have frequently changed direction substantially: constant pricesuntil 1973, a sharp run-up over the next decade, followed by a decade of dropping pricesand the more recent reversal.(Source: xxxxxxx [Need to update graph, of course.]1201001994$/BARREL806040ACTUAL1981 FORECAST19841988199219952001975 1980 1985 1990 1995 2000 2005 2010Figure 1.2: Forecasts of oil prices compared to actual prices. Notice how expert estimatesfailed to anticipate reality, even in the short run.(Source: US Department of Energy, compiled by M. Lynch)Part 1: Chapters 1 to 3 Page 17 of 69