The price of crude oil - and the consumer products like gasoline and diesel fuel that are made from it - will head higher in the summer months, said John Hofmeister, former CEO of Shell Oil, on CNBC.
He said gasoline prices can go up to $5 per gallon, which will put a sizable dent in consumers' wallets and possiblely cause a second recession.
The US, at current production levels, simply won't meet the incoming demand in the summer peak driving season of 2011, according to Hofmeister.
One reason is that demand in Asia has increased compared to past years. More importantly, US oil production has been stymied, especially in the Gulf of Mexico, where regulators have taken a prosecutorial approach and essentially shut down drilling after the BP oil spill, he said.
Currently, the US produces just 7 million barrels of oil per day while it consumes 20 million barrels per day. Hofmeister said if production were just moved to 10 million per day - or 50 percent of the consumption and the US production levels back in the 1970s and 1980s - the shortages would be alleviated and prices won't rise that high.
Moreover, he said increasing production to 10 million barrels per day would create 3 million US jobs in fields like oil drilling to automobile manufacturing.