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Suspended Drilling Could Lead to $5 Gasoline: Hofmeister

Gas prices could climb higher than $5 a gallon by 2012 and oil companies could move their exploration to other countries if the Obama administration’s suspension of offshore drilling continues for six months, John Hofmeister, CEO and founder of Citizens for Affordable Energy, told CNBC Tuesday.

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CNBC.com

“Politics is destroying our own domestic oil industry,” said Hofmeister, a consultant to BP , former CEO of US operations for Shell and author of Why We Hate the Oil Companies.

“It’s one of the last great industries we have in this country. It’s a risk industry, there’s no question about it.

“But if we don’t get politics out of energy and do the things that make good sense for the future of the American people, we’re hurting ourselves.”

Hofmeister acknowledged that the inability of BP to stop the oil flow into the Gulf of Mexico has shored up sentiment against offshore drilling. But, in the long term, he said it was a mistake to stop drilling.

Suspension of new domestic oil drilling means the layoff the region's energy workers and an increase in dependence on foreign oil, he said. An estimated one-in-four workers in the Gulf coast region works in the oil industry.

Fishermen along the Louisiana coast and sport fishing captains have lost their livelihood for this season. Oil from the spill has already reached the Lousiana coastline and could hit Alabama and Mississippi as early as this week.

“The rigs aren’t just going to sit there for six months while the presidential commission does what it needs to do: They are going to other places in the world where they’ll be locked into projects that last two to three years,” added Hofmeister.

“We have pushed drilling back by an extraordinary amount of time already. We don’t have that much time to really keep building our capacity to keep gas prices from shooting through the roof.”

Hofmeister said the region has a 40-year history of safe drilling in some 35,000 wells.

He reiterated that it’s key to determine what went wrong with the Deepwater Horizon well, at the heart of the oil spill. The well, as he understood the situation, was known to be troublesome and it was drilled in haste to move on to the next well.

He added spill clean-up measures, such as using booms, burning and dispersants, are old-style remedies that don’t really work that well, and that BP needs to continue to seek out new solutions.