|
Oil insider sees $5 gasoline by 2012 Former Shell Oil President John Hofmeister envisions political gridlock, other factors inflating U.S. prices to record highs Rose Ragsdale For Petroleum News
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 told Platts Energy Week Dec. 26.
John Hofmeister also predicted little or no new drilling in the deepwater Gulf of Mexico during the next two years, as national policymakers continue to respond to the BP oil spill with tighter oil and gas regulations.
“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 the grassroots group “Citizens for Affordable Energy.”
“Blackouts, brownouts, gas lines, rationing — that’s my projection based upon the current inability to make decisions,” he 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.”
Hofmeister, whose interview for the TV news program was taped Dec. 1 during a Platts Global Energy Outlook Forum in New York, said he expected the result of the November elections will worsen political gridlock in Washington, D.C.
Though the 112th Congress has potential for compromise, Hofmeister predicted a worse outcome over the next two years that will take us to 2012 with higher gasoline prices, uncertainty as to the future of hydrocarbons, and more regulation on the hydrocarbon industry.
Backlash potential in 2012 “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 a hydrocarbon-only type of future with maybe some nuclear, instead of moving on into the 21st century,” he said.
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. While the government has officially lifted a moratorium on deepwater drilling in the Gulf of Mexico, he said 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.
Hofmeister said the government does not understand that the industry plans its capital budgets in three-year cycles, and if the Gulf of Mexico is uncertain, oil companies will reallocate money for drilling elsewhere in the world.
He shared his views on U.S. energy supply and demand earlier in a book titled, “Why We Hate Oil Companies: Straight Talk from an Energy Insider.” Among its recommendations is a government agency modeled after the Federal Reserve to develop national energy policy.
| 