Oil prices are getting scary: Former Shell Oil president

The collapse in oil prices, now hovering around $45 per barrel in the U.S., is terrifying, according to former Shell Oil President John Hofmeister.

“It’s getting to a scary point,” he said during an interview on FOX Business’ Varney & Co. “If we get below $40 we’ll see rapid stopping of drilling because the companies simply can’t afford it.”

The drop in oil is also a warning sign for the global economy.

Viable prices, according to Hofmeister, range from $50 to $60 a barrel.

Crude prices sunk to a 17-month low on Friday, down about 24 percent this year, as global oversupply kept buyers away from the market ahead of the holiday break. However, in Hofmeister’s opinion, crude is at its lowest point.

“I hope for the sake of both consumers and the industry that we are at the bottom,” he said.

Currently national gas prices at the pump average around $2.34 a gallon, as tracked by AAA. While consumers are getting a break, Hofmeister warned that cheaper prices could backfire.

“They will get the reverse impact months from now when they get a spike,” he said. “So suddenly 25 cents a gallon spike and the consumers say whoa what happened? Where did cheap oil go?”

Falling oil prices have dented the shares of Exxon Mobil and Chevron, both of which have lost between 16 and 18 percent this year.

Ticker Security Last Change Change %
XOM EXXON MOBIL CORP. 104.97 -0.69 -0.65%
CVX CHEVRON CORP. 154.05 -0.56 -0.36%