Analyst Predicts $12 a Gallon Gas

by John Horner

Published: May 22nd, 2008

The Wall Street Journal [sub] reports: "The world's premier energy monitor is preparing a sharp downward revision of its oil-supply forecast, a shift that reflects deepening pessimism over whether oil companies can keep abreast of booming demand." Previously, the International Energy Agency had forecast an ever-increasing supply to match ever-increasing demand. Oops. The U.S. Energy Department's own forecasting shop, the Energy Information Administration, has long adhered to the same demand-driven scenario. Now, both agencies have been caught with their analytical pants down. While some blame oil speculators for rapidly rising fuel costs, most economists and oil analysts point to increasing world-wide demand combined with the difficulties of finding new oil and oil suppliers unwillingness to spend the money to find more of the stuff. Speaking on CNBC's Squawk Box, Dr. Robert Hirsch, Management Information Services Senior Energy Advisor, fueled speculators' speculation. "The prices that we're paying at the pump today are, I think, going to be 'the good old days,' because others who watch this very closely forecast that we're going to be hitting $12 and $15 a gallon, and then, after that, when world oil production goes into decline, we're going to talk about rationing."

John Horner

More by John Horner

Comments

Join the conversation

4 of 73 comments

Landcrusher on May 23, 2008

I can only surmise that the small wmd caches that were found have not been enough to win the war in the press over wmd. Therefore, it may have been the administrations plan to not try to fight that fight anymore. If they pointed to what they found, it may only have caused another round of attacks from the left over the original reports being overstated instead of just wrong. When both sides are fighting over power rather than results, who knows about anything coming out of that rat's nest.

Like Reply
Jim K on May 23, 2008
• 50merc : May 23rd, 2008 at 12:17 am When I see some antiwar protestor chanting “No war for oil,” I feel like going up to him and saying, “Why not? Sounds like a great reason to me!” After all, a reliable and affordable supply of oil is critical to any economy more developed than Lower Slobbovia. Interrupting commerce in oil is akin to blockading purchases of food. • Pch101 : May 23rd, 2008 at 10:34 am I’m with Mr. Leikanger here, I just don’t understand the denial. It’s pretty simple: -The US has little domestic oil, and Norway is running out -Much of the world’s reserves are in the Middle East and Caspian region -Consumption in Asia is trending upward quickly -The US government forecasts that the Chinese will be consuming as much oil as the US by 2035 -Between India and China, they have 1/3rd of the world’s population -China is earning billions from exporting goods to the US and the west, and hasn’t quite armed up…yet. But once armed, it could field an army substantially larger than anything that the US could offer. The writing is on the wall. Some day, there is a high likelihood that oil will stop being just another commodity available on the open market for everyone to buy like wheat and sugar, and will become a weapon to be used by these petro-dictators to play off the major powers against each other. This region is of utmost importance to us. The Iraq war was clearly an effort to secure supplies and establish a presence in the Middle East on the border of Iran so that stable flows to the US and her allies could be ensured in the future. 9/11 provided the perfect opportunity to justify this presence. If Iraq was exactly what it was, except it was located in a different neighborhood and had no oil, we couldn’t have given a rat’s back end about it. It’s really not complicated at all — oil is of strategic importance to the US and the west, and the powers that be are worried about what could happen, given current trends. Frankly, they’re right to worry. The Carter Doctrine established that the US would go to war to protect its access to oil. It might have been a stretch to do so preemptively, but it is a longstanding, bi-partisan position that the US makes oil security a high priority. I understand that the PR spin doesn’t allow the government to actually say this so clearly, but you would think that intelligent, analytical citizens could figure it out just through basic observation. The world is full of despots, but we don’t invade all of them. We need to have a compelling reason, and in the case of Iraq, most of it is because of that juice that lies beneath it. Ding..ding..ding..ding, we have couple of winners here, with abolutely no sarcasm intended. 50merc and PCH, you guys have absolutely hit the nail on the head. These "No War for Oil" jerks completely have their heads in the sand. Yes, we as a country need to be pursuing alternatives to being dependant on foreign oil and reducing our consumption. Nationally, we should be pursuing this with an effort that would dwarf the race to reach to moon. However, until we have achieved that, in order to secure our way of life, we have to secure our sources of oil. Unless you are going to go and live 100% off the grid and subsistence farm, live off the land etc. you are being a hipocrite to yell "No war for oil".

Like Reply
Pch101 on May 23, 2008
Unless you are going to go and live 100% off the grid and subsistence farm, live off the land etc. you are being a hipocrite to yell “No war for oil”. Yes, but there is plenty of hypocrisy to go around. The administration pretended that it was about democracy and weapons of mass destruction, when it wasn't about either. Ever since, they have continuously lied about the progress of the war and the tenuousness of the US position. All of that dishonesty sets up Bush and his team for fair criticism.

Like Reply
Ihatetrees on May 23, 2008

There is something to be said for the benefits of a stable oil market - even at the cost of war. Chaotic and/or failed governments are not good at efficiently using oil and other natural resources. At least the Saudi's seem to know when to ask for foreign help in running their fields. (They're probably better managed than Mexico's or Venezuela's). Hell, I've heard that Iran IMPORTS gasoline because of limited refining capacity.

Like Reply