Gas Prices to Hit $5 in 2012, Says Former Shell President

Gas prices in the United States are already high enough, topping the $3 mark for the first time since October 2008. This is up 4% from a month ago and 16% from the $2.585 average a year back, according to figures recently released by the American Automobile Association. However, most market analysts firmly believe prices could go even higher.

According to the former president of Shell Oil, they could skyrocket in the coming year to as much as $5 per gallon. In an interview with Platt's Energy Week television, John Hofmeister stated that he believes Americans could pay $5 for every gallon of gas they put in their car by as early as 2012. "I'm predicting actually the worst outcome over the next two years which takes us to 2012 with higher gasoline prices," he was quoted as saying by CNN Money. He did not give clear details of what will drive this spike, yet we are inclined to take notice, as US Crude is trading at $91 per barrel.

The price of crude was affected by the weaker dollar and cold weather. OPEC resistance to pump more crude in 2011, due to the well supplied market, boosted the price as well. Kuwait’s oil minister also made a statement recently, saying that the global economy is capable of withstanding an oil price of 100 US dollars per barrel.

Tom Kloza, chief oil analyst with Oil Price Information Service, believes that Hofmeister's predictions will come true not in 2012 but during the next decade. "That wolf is out there and it's going to be at the door...I agree with him that we'll see those numbers at some point this decade but not yet." Kloza said. He believes that demand will be slow to pick up in “some of the mature economies”.