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Former Shell Oil President: $5 Gasoline in U.S. by 2012


Americans will pay $5 for a gallon of gasoline by 2012, thanks to growing global demand for oil, tighter supplies and inadequate responses by the U.S. government, the former president of Shell Oil said Sunday in an interview with Platts Energy Week Television.

John Hofmeister also predicted little or no new drilling in deep waters of the Gulf of Mexico for the next two years, as Washington continues to respond to the BP oil spill with tighter regulation of the oil and gas industry.

“If we stay on our current course, within a decade we’re into energy shortages in this country big time,” said Hofmeister, who retired from Shell in 2008 and now heads a grass-roots group called Citizens for Affordable Energy.

“Blackouts, brownouts, gas lines, rationing–that’s my projection based upon the current inability to make to make decisions,” Hofmeister said. “The politically driven choices that are being made, which are non-choices, essentially frittering at the edges of renewable energy, stifling production in hydrocarbon energy–that’s a sure path for not enough energy for American consumers. When American consumers are short or prices are so high–$5 a gallon for gasoline, for example, by 2012–that’s going to set a new tone. It’s going to be panic time for politicians. They’re suddenly going to get the sense that we better do something.”

“The 112th [Congress] has potential for compromise, but we’ll see. I’m predicting actually a worse outcome over the next two years, which takes us to 2012 with higher gasoline prices, uncertainty as to the future of hydrocarbons, more regulation on the hydrocarbon industry based on who the administration is today,” he said. “And what I fear  the most is that by 2012 prices will be so high that we’ll have a backlash from the electorate and we’ll go into reverse and will go back to as hydro-carbon only type of future with maybe some nuclear, instead of moving on into the 21st century.”

Hofmeister said U.S. oil production will suffer from government response to the explosion of BP’s Macondo well last April and the resulting largest oil spill in U.S. history. He said while the government has officially lifted a moratorium on deepwater drilling in the Gulf of Mexico, slow implementation of new regulations means the freeze on new permits continues.

“I’m expecting no new drilling for two more years at least, maybe one or two token wells,” he said.

The government response will persuade oil companies to increasingly look outside the U.S. for drilling options, he said.

“What the administration doesn’t understand about the industry is how it plans its capital budgets,” he said. “It plans a capital budget on a three-year cycle. If the Gulf of Mexico is uncertain, which it is because nobody knows when they can drill again, then that money will be reallocated elsewhere around the world.”

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6 thoughts on “Former Shell Oil President: $5 Gasoline in U.S. by 2012

  1. This is the same oil and coal interest propaganda we have been fed since the 1970s. Oil, coal and natural gas production in the US is not limited by regulation and any increase in oil production here will not significantly affect the price at the pump.

  2. Mr Hofmeister’s observations about what current politicians are doing, and the probable effects on consumers over the next few years, are likely to be agreed by most people. It’s the solutions to the problems the politicians are creating where people will tend to differ. The solutions will be complex, evolving and likely to require significant behavioural and attitudinal changes from all of us, especially the highest consumers. Solutions will require: real and significant reductions in all aspects of consumption, significant efficiency increases, diversified energy sources, open minds, recognition of the adverse effects of fossil fuel extraction, consumption and combustion, and most of all a view beyond the next election cycle and a commitment to people rather than political party.

  3. I agree with Mr. Hofmeister’s predictions for 2012 particularly since the mission of the 112th Congress led by the Republican majority in the House will never have time to deal with energy policy. It is noteworthy that we are not seeing additional crude oil supply for the last five years while international demand has increased, particularly from the Chinese. Meanwhile, some silently hope that the Iraqis will somehow deliver the promised 12 million barrels per day and eclipse the Saudi production capacity by 2017. This is a false promise because of the lack of basic oil field infrastructure and an Iraqi government consumed with growing pains.

    What could be a real game changer in America is convincing the international oil companies to cooperate with the US government and be part of the solution, much like the way European parliaments work today. $5 dollar gasoline coupled with a massive increase in oil company profits could create this partnership that some shareholders now seek.

  4. Hofmeister makes no sense. He rightly calls the carbon energy issue global but insists that the U.S. needs to open up all its spigots and drill, baby, drill. That would hardly make a blip on the world energy map and would guarantee we would exhaust our last and most expensive carbon resources all the much sooner. Fact is, prices are going up either way because we are at peak oil, a fact that Hofmeister flatly refuted three years ago when he was president of Shell USA, even though his boss at the parent company embraced it. This guy is an hydrocarbon energy shill.

  5. Joseph Goebbels had a better grasp of the truth than this ex-CEO of shell oil. So sad to see this supposedly educated man stoop to such stupidity.

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