The holidays are over and so are the low gas prices enjoyed by drivers. The U.S. national average of $3.20 a gallon is "as low as you're going to go," Joe Petrowski, CEO of Gulf Oil, told CNBC Tuesday.
"Refining margins are as low as they’ve been in the last 10 years and I think they’re as low as they’re going to go. We’re seeing refineries shut down here on the East Coast. I think that will portend for higher retail gas prices, at least for the next 90 days," he said.
"We’ll probably be in the $3.50s rather shortly. Whether we get to $4, we’ll have to see an event or something to happen there," such as Iran successfully blocking the Strait of Hormuz.
Consumers haven't been stressed at an average $3.20 a gallon, "nor do I think the consumer will be stressed at $3.50," he predicted. "You have to get to the $3.80s before we start to see that usual pullback that we see at the pump."
Gas demand has fallen 5 percent year-on-year, while heating oil demand in the Northeast has fallen and power prices are low, so the consumer has had it relatively easy, he said. The only thing keeping petroleum prices from spiking is "the abundance of natural gas," according to Petrowski.
"I think a lot of people in our industry are investing in ways to start letting natural gas become a transport fuel," he said. "That will be the story in 2012 that will start to bubble to the surface. Hopefully we can diversify away from petroleum as the only transport fuel."
He said Gulf will be switching some of its hundreds of trucks to natural gas. One truck, on average, uses 12,000 gallons of diesel fuel a year — a switch to natural gas will create savings of $24,000 per truck, based on a natural gas price of $2 a gallon, he said.