By Jeff Poor
Business & Media Institute
5/21/2008 3:38:13 PM
It may be the mother of all doom and gloom gas price predictions: $12 for a gallon of gas is inevitable.
Robert Hirsch, Management Information Services Senior Energy Advisor, gave a dire warning about the potential future of gas prices on CNBCs May 20 Squawk Box . He told host Becky Quick there was no single thing that would solve the problem, due to the enormity of the problem.
[T]he prices that were paying at the pump today are, I think, going to be the good old days, because others who watch this very closely forecast that were going to be hitting $12 and $15 per gallon, Hirsch said. And then, after that, when oil world oil production goes into decline, were 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, were not going to be able to get the fuel when we want it.
Hirsch told the Business & Media Institute the $12-$15 a gallon wasnt his prediction, but that he was citing Charles T. Maxwell, described as the Dean of Oil Analysts and the senior energy analyst at Weeden & Co. Still, Hirsch admitted the high price was inevitable in his view.
I dont attempt to predict oil prices because its been impossible in the past, Hirsch said in an e-mail. Were into a new era now, and over the next roughly five years the trend will be up significantly. However, there may be dips and bumps that no one can forecast; I wouldnt be at all surprised. To me the multi-year upswing is inevitable.
Maxwells original $12-15-a-gallon prediction came in a February 5 interview with Energytechstocks.com, a Web site run by two former Wall Street Journal staffers.
[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).
According to associate of Maxwell at Weeden & Co., Maxwell is out of the country and currently unavailable for comment.
Maxwells biography on the Weeden & Co. Web site said he has been ranked by the U.S. financial institutions as the No. 1 oil analyst for the years 1972, 1974, 1977 and 1981-1986, according to polls taken by Institutional Investor magazine.
In addition, for the last 17 years he has been an active member of an Oxford-based organization comprised of OPEC and other industry executives from 30 countries who meet twice a year to discuss trends within the energy industry.
Although Maxwells prediction is for the long-term, not everyone supports high-end predictions, even in the short-term. CNBC contributor and the vice president of risk management for MF Global (NYSE:MF) John Kilduff said on The Call May 7that he expected gas prices to drop following the Chinese Olympics, as Chinas economic boom slows down.
http://www.businessandmedia.org/printer/2008/20080521145247.aspx
