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With retailers and consumers worried about the prospect of $4-per-gallon gasoline, the chief executive of one of the largest oil companies told CSNews that prices could be lower by next spring when more supply is expected to catch up with demand.
"Gasoline prices could go up, or prices could go down, but I think there is more chance they will go down," said Joe Petrowski, CEO, Gulf Oil LP, based in Chelsea, Mass., which distributes motor fuels through a network of 1,800 Gulf-branded sites.
Most experts that CSNews spoke with said that gas prices will continue to edge up as long as demand remains strong. However, Petrowski pointed out that the current demand is being driven by the explosive energy needs of China and India. An oil industry infrastructure that was geared to $12 per barrel oil just five years ago contributes to today’s shortage of 2 million to 3 million barrels a day.
As early as next spring, he forecast, the world will have a surplus of 3 million or 4 million barrels a day, as global production increases, driving down crude prices. "At $73 a barrel, some marginal-producing areas are now economical to develop," he noted.
Gasoline demand in the U.S. also continues to rise, according to a report released last week by the American Petroleum Institute (API). Despite higher pump prices, gasoline deliveries climbed 1.7 percent in July, compared to the corresponding year-earlier period. Year-to-date, gasoline deliveries have increased 0.9 percent.
The API also reported that crude oil production in the U.S. declined by 1.3 percent in July, the smallest year-to-year decline in 14 months. The national capacity utilization rate, which was 94.0 last July, improved to 92.6 percent in July 2006.