Energy expert says $12 per gallon gas isn't far away
Robert L. Hirsch, former senior energy adviser for SAIC, author of the Hirsch Report on peak oil, and all-around energy guru, appeared on CNBC the other day to discuss current oil and gas prices. Here's what he said about gas costing $4 a gallon (via Crooks & Liars):
"[T]he 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 per gallon," Hirsch said. "And then, after that, when oil – world oil production goes into decline, we're going to talk about rationing. In other words, not only are we going to be paying high prices and have considerable economic problems, but in addition to that, we're not going to be able to get the fuel when we want it."
The price range of $12-$15 Hirsch cited comes from Charles Maxwell, the "Dean of Oil Analysts," who made that price prediction in February:
"[Maxwell] expects an oil-induced financial crisis to start somewhere in the 2010 to 2015 timeframe," Energytechstocks.com reported. "He said that, unlike the recession the U.S. appears to be in today, 'This will not be six months of hell and then we come out of it.' Rather, Maxwell expects this financial crisis to last at least 10 or 12 years, as the world goes through a prolonged period of price-induced rationing (eg, oil up to $300 a barrel and U.S. pump prices up to $15 a gallon)."
I'm no economist, so I have no way of evaluating the likelihood of this price scenario. However, it seems obvious that our economy as it is currently constituted is practically untenable without cheap petroleum. We foolishly rely on trucks (rather than trains) to ship our goods, long-distance passenger rail is almost non-existent, and Detroit seems tooled up to build primarily gas-guzzlers. If we sit around and let $300 oil happen without undertaking massive efforts in conservation and alternative fuels in preparation, our economy would run the risk of near total collapse.