Consumers Buying Less as Fuel Prices Rise
Petrowski predicting gas to reach "$4.50 range"
FRAMINGHAM, Mass. -- Consumers are cutting back purchases at gas stations and convenience stores as the price at the pump rises, Gulf Oil CEO Joe Petrowski told CNBC on Tuesday.
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"We watch closely at the 600 stores we own and operate," he said. "We're starting to see, like in 2008, some resistance."
The number of gallons purchased is down and so are purchases at the company's c-stores, which could be a sign of a more general cutting back by budget-conscious consumers, said the report.
Things are not as bad as in 2008, but could get there, Petrowski said.
"We can go a lot higher to what we saw in 2008, which was extraordinary. In 2008 we were selling eight gallons per pickup. Normally it's 12. That's a real sign of distress," he said.
Petrowski raised his previous prediction and now thinks gasoline will "go toward the $4.50 range" in the East where several refiners have been shut down, losing 50% of the region's refining capacity.
Also, "demand is exceedingly weak; heating oil demand, mainly because of the [milder than usual] winter, is down 14% and driving is less than it was in 2005."
He said 140,000 of the 165,000 gas stations in the United States are owned and operated by people owning five or fewer stations. "It really is a small business," he said. "They're much more interested in getting you inside their store" where the margins are bigger than gasoline alone.
"So legend has it they like to make money at the pump. The reality is they sometimes use gasoline as a loss leader to bring you inside the store," Petrowski said.
Cumberland Farms Inc., Framingham, Mass., has a network of retail stores, gas stations and a support system including petroleum and grocery distribution operations spans 11 states across the Northeast and Florida. Gulf Oil LP is one of the Northeast's largest wholesalers of refined petroleum products. It distributes motor fuels through a network of more than 1,800 Gulf-branded gasoline retail centers, 12 proprietary oil terminals and a network of more than 50 other supply terminals. It supplies heating oil, diesel fuel, jet fuel and kerosene to these branded retail outlets through both its Gulf brand and, in the seven states of New England and New York, the Exxon brand.