Gulf Oil's Petrowski Speaks Out on Energy Policy with Neil Cavuto and Fox Business
NATIONAL REPORT -- Appearing on Fox News' "Your World with Neil Cavuto" cable news program, Gulf Oil CEO Joe Petrowski was critical of the nation's "incoherent" energy policy and questioned why the United States is lending billions of dollars to Brazil's state-owned oil company, Petrobras, to finance exploration of the huge offshore oil field near Rio de Janeiro.
President Obama was in Brazil this week, praising the country's rise as an emerging global power.
Speaking to Cavuto as well as the Fox Business channel, Petrowski offered insights on the economic implications of the spikes in oil and gas prices.
U.S. households will fork over roughly $700 more for gasoline in 2011 versus last year, using an annualized price of $3.61 a gallon. That's a hike in gas at the pump of about 28 percent year over year, to a total annual car fuel expense of $3,235. Petrowski told Fox Business "a rise in gasoline prices will be worse for consumers than in 2008 because [of] the tighter credit/debit (plastic) for the vast majority of consumers," meaning, credit card and debit card rates have risen since then.
Petrowski also offered these insights to Fox Business:
* "While the Mideast is certainly the catalyst for the recent price rise and certainly the big wild card, we should not simply focus on the Libyan production shortfall of almost 900,000 barrels (one-half their production)."
* "A drop in U.S. production of 300,000 barrels per day (self imposed) and an increase in demand (600,000 bpd) in the U.S., along with a 1 million barrel increase in world demand (70 percent China driven) along with production problems in other areas (knocking off 500,000 barrels) means the aggregate swing in daily supply and demand is closer to 2.4 million barrels or 3 percent."
• "If you believe there is even a 10 percent chance of a 25 percent shortfall" in the rest of the world's "hot spots, you can add another 2.5 percent shortfall to daily supply."
• While "last year's prices average $80 on West Texas Intermediate," then $100 oil on average is to be expected even "without a Mideast risk premium."
• "If you factor in another 20 percent for a Mideast risk premium, then $120 would be an expected price."
• "Low interest rates, speculative momentum [and a] cheap dollar makes my original $125 per barrel by Memorial Day reasonable (markets always overshoot both directions)."
• "Tapping the Strategic Petroleum Reserve now is wrong; it is Novocaine to the wound -- I would feel better addressing the wound and eliminating the cause."
Petrowski recommends that the U.S. increase domestic production, shift transportation fuel to natural gas and dampen speculative fever via lower interest rates.