Fuels

Record High Prices for Oil?

Gulf's Petrowski predicts $150 per barrel by Memorial Day as gasoline demand slides
FRAMINGHAM, Mass. -- The price of crude oil could hit nearly $150 per barrel by Memorial Day, Joe Petrowski, CEO of Gulf Oil and the Cumberland Gulf Group, told CNBC Thursday.

"If we're not producing it domestically, because we're trying to achieve administratively what we don't seem to want to pass legislatively, and our imports are going down and demand's up, it sets the stages," said Petrowski, whose company operates 600 convenience store/gas stations in the Northeast.

"I think we'll be at $100 in the first quarter," he added, "and there's one-in-four chance we'll [image-nocss] take out the [record] $147 highs before Memorial Day."

Gulf Oil is a wholly owned subsidiary of Cumberland Farms. According to Petrowski, the company owns oil terminals, imports oil and distributes about 250,000 barrels a day, which is more than some OPEC (Organization of Petroleum Exporting Countries) countries.

Petrowski said he's worried about higher oil prices because it hurts business and the economy.

"Higher prices are a concern to the company, because we have at any time almost 2 million barrels in our pipeline distributing to 3,500 gas stations," he added. "We run a retail organization, and low oil prices are good for the economy, good for our businesses, and high oil prices are an extreme drag. I like low oil prices."


At the same time, other energy-industry watchers say U.S. gasoline demand is at the start of a long-term decline. By 2030, Americans will burn at least 20% less gasoline than today, even as millions of more cars clog the roads, according to a report from the Associated Press.

The country's thirst for gasoline is shrinking as cars and trucks become more fuel-efficient, the government mandates the use of more ethanol and people drive less.

"A combination of demographic change and policy change means the heady days of gasoline growing in the U.S. are over," Daniel Yergin, chairman of IHS Cambridge Energy Research Associates and author of a Pulitzer Prize-winning history of the oil industry, told AP.

This isn't the first time in U.S. history that gasoline demand has fallen, at least temporarily.

Drivers typically cut back during recessions, then hit the road again when the economy picks up. Indeed, the Great Recession was the chief reason demand fell sharply in 2008.

But this time looks different. Government and industry officials--including the CEO of Exxon Mobil--say U.S. gasoline demand has peaked for good. It has declined four years in a row and will not reach the 2006 level again, even when the economy fully recovers.

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