MINNEAPOLIS (WCCO) — Think gas prices are high now? Just wait.
A former oil company president is predicting gas prices could reach $5 a gallon by 2012.
The current average price of gas across Minnesota is $3.03, according to AAA. That’s nearly 50 cents more than last winter and it’s the most we’ve paid in two years.
“In the U.S., we use 20 million barrels a day. We produce about seven. We’re not drilling. We’re gonna produce six about a year, year and a half from now,” said former president of Shell Oil, John Hoffmeister.
He’s part of a group that wants America to increase production to 10 million barrels a day, easing foreign oil dependence.
But Minneapolis commodities trader Gordon Kralovetz said because of a near monopoly, even more domestic oil may not help consumers at the pump for long.
“There are like six corporations that own 93 percent of it from the ground, into your gas tank. So, there’s no incentive for them to push the price any lower,” Kralovetz said.
Especially at a time when the world’s demand for oil is soaring, driving prices up.
Each time gas prices spike the experts tell us, use less, drive down demand and affect the price. But with global pressures pressing so hard that may not be the case this time.
“You know, China’s replacing us as the No. 1 user of gasoline in the world. So they’re going to be a huge factor. India’s a huge factor,” Kralovetz said.
Haji Abdow says there’s no way he can afford $5 a gallon gas.
“It’s like a rollercoaster, goes up and down,” he said.
So he hopes mass transit is up to the task.
“We have to have access to a lot of trains or busses, like Europe, you know,” Abdow said.
Luke Hjort already traded his construction van for a small car. He said $5 gas will keep him close to home.
“Even going to visit my folks in South Dakota, it’d cost me about $400,” he said.
Kalovetz said when gas was more than $4 a gallon in 2008, our economy was a lot healthier.
Now we have far more people unemployed and lower incomes so expensive gas will hit harder this time around.
For that reason he said maybe demand will plummet and push prices back down, but not without great hardship.
WCCO-TV’s Dennis Douda Reports