An increase in summer driving, particularly in the northeastern U.S., provided "a nice pickup in demand" for gas prices, Gulf Oil CEO Joe Petrowski told CNBC Monday.
But that's a short-term fix for the oil markets, he said.
In the longer-term, demand is outstripping supply and "until we either fundamentally address increased supplies or reduce the demand by switching to other fuels, we’ll see some resistance" to rising gas prices, he added. "If we go to $4 gas at the stores, we’ll see some resistance. We always do."
Rather than tap expensive crude, Petrowski wants to use more Canadian oil and "increase pipeline capacity from [the U.S.] midcontinent to the Gulf Coast to tap into domestic supply."
Petrowski said retail margins at his stores—located in 27 states but mainly in the Northeast—are the "smallest they’ve been this year" at 11 cents to 12 cents, compared with the usual 17 cents to 18 cents. So the dealers or retailers aren't profiting from higher oil prices, he said.
Petrowski called the release of oil from thestrategic petroleum reserves "a parlor trick" that did not lower oil prices as intended. "We’re actually higher than it was before release," he said. In addition, the price is up because investors have been buying oil the way they do precious metals.
"Gold is not the only storehouse of value in times of uncertainty," Petrowski said. "Oil is taking a lot of that function."
He is also worried about hurricane season. The strategic reserves were "created for temporary interruptions of supply due to terrorism or hurricanes, and now that insurance premium the government used to use is gone," Petrowski said.
If any more oil has to be released, he said, "we’re going to build a hurricane premium as we go into August."