Don't expect gas prices to level out now that they have broken the $1 mark. Consumers could see prices top $1.50 a litre in the near future, according to a new report from CIBC World Markets.

Decreasing supply and increasing demand are driving the price increases.

Economists point to 2012 as the crunch year, when the global demand for oil is expected to outpace the production capabilities of existing oil fields. Delays are also expected in creating new oil fields, which will add to the problem.

"Depletion from existing fields has accelerated to over four per cent, a rate that currently cuts nearly four million barrels per day out of each year's production," said Jeff Rubin, Chief Strategist and Chief Economist at CIBC World Markets. "From Kazakhstan to Nigeria's Delta region, protracted delays in some of the world's largest energy mega-projects will have huge impacts on actual supply growth over the next five years."

The report reviewed over 200 new oil projects and found that over the next five years delays will be the norm and not the exception. Some of these projects include the Kashagan project (Kazakhstan), Sakhalin II (Russia), and projects in Canada and Venezuela.

"Of course, stagnant conventional world oil production underlies the recent problems associated with harvesting unconventional supply," said Rubin. "Virtually all of the increases in global oil production have occurred from deepwater fields or oil sands, with conventional production seemingly stuck at 2005 levels of 67 million barrels per day."

As a result of increased car use in China, and Russia, gasoline use has increased six per cent in each, furthering the problem.

Since these countries, as well as India, are more income dependant on the oil supply, they are likely to outbid for the deleted stocks.

It is predicted that oil consumption will fall by four million barrels per day over the next five years as a result of the increase cost of oil. Demand in the U.S. is expected to drop by 10 per cent by 2012.

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