$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."
Copyright 2011 CBS. All rights reserved. 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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U.S. margin rules of the Commodity Futures Trading Commission allow speculators to buy a crude oil futures contract on the Nymex, by having to pay only 6% of the value of the contract. This means that a hedge fund only needs to put up $1 to control $16 worth of oil futures. This extreme leverage of 16 to 1 drove oil prices to wildly unrealistic levels in 2008, and is happening again. This loophole and inequity must be stopped immediately.
As many economic experts have testified before Congress, the majority of oil futures trading comes not from end-users but from unregulated futures speculation by predatory hedge funds, banks and financial groups using futures exchanges and uncontrolled inter-bank or Over-The-Counter trading to avoid scrutiny. Hedge fund managers have testified before Congress and admitted that their speculation had driven prices. It is not "demand in China" that is fueling the price increase - oil trading is done in U.S. dollars and largely on U.S. financial exchanges by U.S. hedge funds. Yet, no action has been taken to protect the American people.
The price of gasoline is rising again, in contrary to the fundamentals of supply and demand, just as it did in 2008. I have the misfortune of having to extensively interact with many hedge fund managers. They have boasted of their driving up the price of oil in 2008. They have greedily looked for and openly talk of the opportunity to "reinflate the bubble", and are now gleefully rubbing their hands in repeating that disaster. They have taken Presidential and Congressional inaction on this issue to be tacit approval to once again do the same thing. This artificial manipulation of the oil market must be stopped immediately.
If you do not want to see gas prices exceed $4 a gallon - and for your hard-earned money to be siphoned off into the pockets of hedge-fund managers and oil companies - write to your Congressional representatives and Senators and demand that they immediately put forth legislation to direct the CFTC to eliminate the 16 to 1 leverage allowed for oil speculation, which will allow the price of oil to reflect true supply and demand. Hedge funds avariciously plundered our country and stole from the American people for their own personal profit, and cannot be allowed to destroy the fragile and floundering economy. This is not about people wanting to drive big SUV's - this is about preventing the collapse of the U.S. economy, and protecting our ability to simply live. Oil is a strategic resource for which financial manipulation cannot be allowed - our needs must come before the influence of oil industry lobbying money. This single action would do more to help rejuvenate the economy than anything else. Artificially high oil prices cost Americans hundreds of millions of dollars per day - money which is once again being siphoned to oil related companies, which could otherwise go to rebuilding the economy.
Congress won't do this on its own. Legislators in both parties have been extensively lobbied by the oil companies, and receive multiple millions in "campaign contributions". They won't act unless they feel strong pressure from us, and they get the message that they won't be re-elected unless they do this. Don't let history repeat itself - write to your Congressional representatives and demand action.
And the rest of us pay their taxes, pay for their overseas expansion and then we divide up the crumbs.
But per capita, they put more money back into the economy.
Why? If demand is down and supplies are plentiful - and they are - why would prices be going up?" ...
"Because Wall Street speculators are driving up oil and gasoline prices again - just in time to dampen holiday cheer.
It's all about investor optimism, and that's been the story about 2010 - that's the primary reason why we're seeing oil prices at $90 (a barrel) and gasoline making an uncharacteristic climb in December towards $3 a gallon," said Troy Green, a national spokesman for the AAA Motor Club, which monitors gasoline prices
Firstly, America has enough coal to supply our energy needs for the next 200 years.Back in the late 70's with a grant from the Federal Government, a technolgy was developed to burn large chunks of coal with sand in a self-contained boiler without polluting the atmosphere; it was called the "fluidized bed burner." The ashes could then be used to make cement products.They could be built in modular units as small as a home furnace and large enough to be shipped on RR cars to any destination and assembled in multilpe Units that would comprise large power plants. A pilot plantwas built in West Virginia. It disappeared and the technology along with it.
Secondly, in the mid 70's a Ford Pinto 4 cylinder engine appeared on the cover of "Popular Mechanic's." An automotive engineer redesigned the motor. The engine block was made of a light-weight,composit material with metal sleeves lining the cylinder walls; the valves were ceramic and the engine was air-cooled.MILAGE: 242 MPH. POOF...GONE!
Thirdly,Remember the Nixon-Kissinger secret deal with the Saudi's that abdicated our control over the price of oil which led to the formation of OPEC.We should also realize:the Arabs can't EAT oil & sand!