$6 to $8 Gas? Prices Will “Skyrocket” If U.S. Stops Drilling, Says Former Shell Exec

Saturday, June 5, 2010
By Paul Martin

by Heesun Wee
FinanceYahoo.com

Oily tar balls hit the sands of the Florida Panhandle Friday even as BP engineers adjusted a sophisticated cap over the Gulf of Mexico oil spill. The containment cap is the latest attempt to plug the worst oil spill in U.S. history, triggered when the Deepwater Horizon rig exploded April 20, killing 11 people.

Whenever the spill is eventually contained, and the best estimates are still in the “months” category, the BP disaster has major implications for the environment, America’s energy policy, and consumers.

“The implications for the American consumer and our society and the domestic United States are very seriously at the front of what I think about,” says our guest John Hofmeister, former president of Shell Oil and author of Why We Hate the Oil Companies.

The BP disaster has raised questions about halting risky, domestic oil extraction procedures altogether, including deep-water programs. But Hofmeister — a longtime advocate of more domestic drilling — says Americans simply can’t afford to stop drilling. (America’s net imports of foreign oil have jumped to 58.2 percent in 2007 from 34.8 percent in 1973, accoding to the latest annual figures from the U.S. govermment.)

Prices Could “Skyrocket”

“While we dream about a new energy system that is decades in the future, the prices that consumers will have to pay for things like gasoline, electricity, and diesel would just skyrocket” if America halts offshore driller, Hofmeister tells Aaron and Henry in the accompanying segment. “Prices could get to the point where fixed-income and low-income people are simply taken out of the personal mobility marketplace, which would be a shock and unnecessary because of our unwillingness to produce domestic resources.”

But as Aaron asks: “People also don’t want oil washing up on their beaches, whether it’s in the Gulf of Mexico or Florida or maybe up the East Coast. Do you that think the American public is going to say, ‘We don’t want you drilling at all offshore?’ ”

Only if the American public is willing “to accept $6 to $8 [per gallon] gasoline as the alternative, when they can get it,” Hofmeister replies.

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