Alon USA CEO Reflects on Gas Prices

WEST TEXAS – yesterday interviewed Jeff Morris, president and CEO of Alon USA, a major oil refiner and operator of more than 300 convenience stores.

In a six-month period that began in mid-2008 and ended in the spring of 2009, crude prices ranged from $147 a barrel to $40 a barrel, said Morris.

“If we can’t predict crude prices, we sure can’t predict gasoline prices,” he said, his way of illustrating he’s not sure how high gasoline prices may rise with crude prices over $100 barrel. Crude prices, along with gasoline prices, have not risen due to a supply issue, he said. At last month’s NACS Leadership Forum in Miami Beach, Morris, in an interview with CSNews Online, said the best predictor of crude prices is the value of the U.S. dollar. “There is a higher correlation between the dollar and crude prices than any other variable,” Morris told CSNews. “The weaker the dollar; the more expensive gas gets. When the dollar gets stronger, gas gets less expensive.”

Predicting the value of the dollar, though, is no easy feat, he noted.

If gasoline remains expensive, he told, consumers may still drive to school and work and make visits to relatives living close by, but they’ll put off more distant trips.

“It’s been interesting to me to see how our customers behave,” he continued. “A few years ago when gasoline hit $2 a gallon, I was concerned and convinced customer behavior would change and was shocked when it didn’t. Gasoline hit $2.50, $3 a gallon and behavior didn’t change. Finally, when it hit $4 a gallon, behavior began to change. It’s clear $4, at least in my view, means something.”

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