Gas Approaching $4 a Gallon This Summer: Gulf CEO
The chief executive of Gulf Oil sees gasoline approaching $4 a gallon this summer despite declining demand as more refineries close and tensions heat up in the Middle East.
Refineries are closing on the East Coast and in the Caribbean on shrinking margins while financial problems are hitting European refiners and even natural gas wells are being shut in, Joe Petrowski told CNBC Monday.
"We’re not doing anything to help ourselves and unfortunately we’re starting to see at some of our [Gulf] stores the higher prices impact retail sales, which is a sign of distress," Petrowski said.
If the U.S. economy was stronger and not coming out of a recession "we'd be close to $3.80 to $3.90 today," he added.
He also sees the price of Brent crude "easily" going to the $130 to $135 a barrel range this summer.
Petrowski predicted last monththe then-$3.20 a gallon national average was "as low as you're going to go" and that $4 gas was likely if events heated up in the Middle East, such as Iran blocking the Strait of Hormuz.
More recently, the former CEO of Shell Oil's U.S. operations, John Hofmeister, warned of a "better than 50 percent chance" gas would spike to $5 a gallon because of heavy demand in emerging markets and weak public policy at home.
Petrowski said the U.S. can't depend on the promises of Saudi Arabia to keep oil at $100 a barrel.
"I’d like us to be a little more proactive in our own solutions" such as "de-bottlenecking some of our pipeline infrastructure in the U.S.," Petrowski said.
A fight between Israel and Iran might drive the price of gas up even further, he added.
"We certainly would go to a rationing point," he said, but "I don’t think anybody could predict how high we'd get and how long we'd stay there....As you approach $4 to $4.50 you’re going to see a consumer that severely cuts back" and "at $4 to $5 you’d hit a demand wall that wouldn’t sustain those prices unless it was very horrible in the Mideast."