John Hofmeister, former president of Shell Oil, sees $5 gas ahead for Americans due to growing global demand, tighter supplies and inadequate government response.

Hofmeister also sees little or no new deep water drilling in the Gulf, at least for a couple of years.

“If we stay on our current course, within a decade we’re into energy shortages in this country big time,” said Hofmeister, who retired from Shell in 2008

Nobody knows for sure what the future will bring, but…

MarketWatch reports the US Energy Department says there is an 8-10% chance of $4 gas in August and September and a 25% chance of $3.50 gas in the summer. Diesel prices could rise 14% this year.

“Fuel prices are rising strongly across the board on the back of the robust-looking gains that have been seen recently in the crude-oil market,” said Matt Parry, senior oil consultant at KBC Process Technology Ltd. “Not only that, but recent months have enjoyed a consistent thread of surprisingly strong demand metrics right across the globe.”

Crude oil is trading at $90/barrel (in part due to the Alaskan Pipeline problems)

Prof. James Hamilton is a leading economist at U Cal San Diego (one of the top programs in the country). He has done some important research on oil price movements, particularly relating to the factors behind the last spike.

Here is a conclusion from a piece he wrote yesterday:

“…when demand booms and production is stagnant, it is possible for the price of oil to quadruple in a short period of time.
I say that because that’s exactly what we’ve seen happen on three different occasions.”

This guy is no fear-monger.
http://www.econbrowser.com/archives/2011/01/the_first_oil_s.html

Analysts are getting their forecasts together for 2011 as fast as they can(what? they didn’t know 2011 was coming?).

Oil Prices Higher.

Barclays – Oil could hit $100/barrel in 2011

Moody’s – should average $80/barrel

OPEC – comfortable with oil between $70-80/barrel. Should be happy campers in 2011. Unfortunately the EU will pay the price, 2.1% of GDP for oil imports.

Today is the third day of the shutdown of the trans-Alaskan pipeline. (Think shipping 12 % of the US crude output.)

BP in the hot seat again. It is a leak in the northern end of the Prudhoe Bay pipeline.

The pipeline is 33 yrs. old and some are saying BP and others are not putting enough $$ into maintenance. The old gray mare just ain’t what she used to be. On the other hand there are always work-arounds.

On the grand scale, this is just a hiccup. Should not affect oil prices a whole bunch.