Tuesday, December 28, 2010

$5 gas by 2012: By demand or hyperinflation?

From CNNMoney.com:
The former president of Shell Oil, John Hofmeister, says Americans could be paying $5 for a gallon of gasoline by 2012.
In an interview with Platt's Energy Week television, Hofmeister predicted gasoline prices will spike as the global demand for oil increases.
"I'm predicting actually the worst outcome over the next two years which takes us to 2012 with higher gasoline prices," he said.
Tom Kloza, chief oil analyst with Oil Price Information Service says Americans will see gasoline prices hit the $5 a gallon mark in the next decade, but not by 2012.
"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.
"The demand is still sluggish enough in some of the mature economies."
But demand and production are only two factors which will determine gasoline (and diesel) prices in the post-QE2 world of 2011.  Contra Messrs. Hofmeister and Kloza, hyperinflation will be pumping everyone's gas by 2012.

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