$5 a Gallon Gas on Way, Ex-Big Oil Exec Says

Prices at the pump have been on the rise and are now averaging just over $3 a gallon nationwide, according to AAA.

That's up almost 20 cents from just last month and more than 40 cents from a year ago.

But it's nothing compared to what one former oil industry insider says is in the pipeline for motorists.

John Hofmeister, an ex-president of Shell Oil, says we're looking at $5 a gallon gas in 2012.

Hofmesiter, who is founder and CEO of the non-profit organization Citizens for Affordable Energy and author of "Why We Hate the Oil Companies: Straight Talk From an Energy Insider," due for release May 25, notes that crude oil prices rose above $91 per barrel Tuesday, and several large investment banks see it hitting $100 next year, as China, India and other emerging economies compete with developed countries and tighten the world's oil supply

In predicting $5 a gallon gas, Hofmeister cites not only increased oil demand from Asia, but Obama administration clampdowns on offshore drilling.

He also says there's little Americans can do to cut their own demand, since many drive to work.

"We're right back to where we were in 2007 and 2008, in terms of U.S. demand," Hofmeister told "Early Show" co-anchor Rebecca Jarvis Wednesday. "What's different this time, however, is that Asia's demand is much, much higher than two years ago. And the world is having a very difficult time getting past 85 million barrels-a-day of (crude oil) production.

"In the U.S., we use 20 million barrels a day. We produce about seven. We're not drilling. We're going to produce about six a year, year-and-a-half from now. That means we have to import more oil, while the whole rest of the world is also importing oil. It's going to put tremendous upside pressure on the crude oil price, which is the only way to tamp down demand. It's very worrying for consumers and, really, for the American economy to think we would go back to such high prices."

Hofmeister calls it a "disgrace" that officials here didn't see this coming.

"Back in 2007 and 2008," he told Jarvis, "I testified (before Congress), when I was still part of Shell, that we needed to resume oil production in this country, back to previous historic levels of about 10 million barrels a day. We were at seven at the time. We have done nothing in the last two, two-and-a-half years to try to increase the domestic production back to where we were in the 1970s at 10 million barrels a day. That would have a tremendous impact not just on worldwide, but on U.S. affordability of oil.

"But instead of producing more oil, what are we doing? We're producing less. There is a (drilling) shutdown in the Gulf (of Mexico) and the secretary of the interior has postponed the next (oil drill tract) five-year leasing plan to 2017. So, we're not doing very well on producing our own oil."

And the demand side, he adds, offers little relief. "Unfortunately," he observed, "for some people, they have no choice but to cut back because they just don't have the deposable income to purchase gas at those high prices. Unfortunately, also, high gas prices -- or high crude oil prices tends to increase unemployment, because companies can't afford to stay in business.

"It's really a disgrace that the world's largest economy (that of the U.S) hasn't figured out over these last years that we would resume demand and need more oil."
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