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NEW YORK -- U.S. drivers facing a budget crunch due to rising gas prices should be wary, according to former Shell CEO and Citizens for Affordable Energy founder John Hofmeister. He predicts that heavy demand in emerging markets and weak domestic policies will result in a "better than 50-percent chance" that the price of fuel will spike up to $5 per gallon, CNBC reported.
"What's really unprecedented is developing countries, particularly China and India, have this insatiable need for more oil and that has not been taken into account when we think of public policy in this country," said Hofmeister.
"So while we may be producing a bit more oil in this country and while demand is down a bit, on a global basis, I'm afraid we face a continuing onslaught of prices creeping ever higher." He added that he would like to be proven wrong on the subject.
On the same day that Hofmeister issued his prediction, the International Energy Agency cut its oil growth demand forecast for the sixth month in a row due to a weak global economy, according to the CNBC report. Hofmeister cited the closing of East Coast refineries due to declining margins and uncertainty in the Persian Gulf as reasons for his disagreement.
He recommended more domestic drilling to ward off future price spikes. "We have not had the kind of public policy support for domestic natural resource production increases that would carry through into market prices in the United States given the global demand and geopolitical uncertainty that comes out of the [Persian] Gulf daily," he said.
This isn't the first time Hofmeister has forecast such a price spike. In December 2010, he predicted the country would pay $5 per gallon of gasoline by 2012. Other industry experts have also predicted rising fuel prices, though most have forecasted an increase to the $4-per-gallon range.