Gas Prices to Hit All Time High?

Back in 2010, John Hofmeister, former President of Shell Oil, predicted gas prizes would soar to $5 a gallon in 2012 due to rising crude oil prices. However, Hofmeister missed his mark as they only reached $4 a gallon. Now today, Hofmeister is preaching that people should look out for that $5 a gallon scenario again.

Today, gas is $2.14, it’s lowest price since May of 2009. Hofmeister wants drivers not to get too comfortable with this price as he believes things will be very different later this year. With crude oil hitting below $46.50 a barrel today, Hofmeister believes crude oil will rebound back to its $80-90 price range and with that rebound, people will again be paying at the pumps. While the price of oil continues to decline, we did however see some resistance. Last week, the price of oil had its first rise in almost two months. This could be just the first of many signs to come.

Hofmeister believes that if we do not see $5 a gallon this year or early next, that it will at least happen sometime this decade. If demand growth continue to climb towards 100 million barrels a day and industry production falls short, we can very well see $5 a gallon. To help instill confidence in this theory, Ryan Lance, CEO of ConocoPhillips, also believes oil prices can rebound faster than anticipated, much like they did in 2009.

While Hofmeister is a credible person and we have every reason to believe him, other credible sources in the industry have different views on the future of gasoline prices. The US Energy Information Administration predicts an average gasoline price of $2.33 this year and $2.72 in 2016. Obviously this a very different prediction compared to Hofmeister. While Hofmeister was wrong in 2010, he still was not far off. Prices did in fact rise to $4, so do we take what he has to say seriously this time around?

For more, please visit CNBC‘s take on the issue. For more information on drilling and oil news, please visit Maritime Drilling School.