Say It Ain’t So… Former Shell Boss Predicts $5 Gasoline
by Steve McDonald, Investment Analyst
Thursday, February 10, 2011
Former President and CEO of Shell, Jon Hofmeister, has some interesting things to say about where the price of oil could go in the next year or so.
According to Hofmeister, despite oil's recent price slip, there is a huge - and growing - demand just below the surface, much of it from emerging markets. He says that with United States production lower than the levels of the 1970s and 1980s, prices will rise in the spring.
He sees gasoline prices reaching as high as $5 per gallon.
But the most telling part of Hofmeister's comments concerned what he calls the over-reliance of energy estimates on our energy reserves.
He quoted the 20 million barrels of U.S. oil demand per day and noted that while every estimate cites "abundant" reserves, the total is actually around 37 million barrels - just two days worth.
And ominously, Hofmeister says if the price of oil runs as high as he thinks it will, this demand/reserve scenario, coupled with what he called the ridiculous energy policies of this administration, could well result in another recession.
Specifically, he's most concerned that the administration is emphasizing alternative energy development, while ignoring efforts to make oil and coal cleaner and greener - a big mistake that will cost America dearly.
In fact, Hofmeister had nothing good to say about this administration's energy policy.
$5 gasoline? Let's hope not.