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IRVING, Texas -- Exxon Mobil Corp.'s CEO is concerned higher gasoline prices could cause Americans to cut fuel usage, as they did during other price spikes, and hurt the recent economic rebound, according to a report by the Houston Chronicle.
"We're not out of the last economic recession, so at what level that has a negative effect today, it's hard to say. But it does concern me that energy prices not become an obstacle to the economic recovery," Rex Tillerson told reporters after a speech to the Houston World Affairs Council.
Energy prices would be kept in check if the government resists the urge to "over-regulate" the oil and gas industry and creates a policy framework that encourages long-term investments in energy, Tillerson said.
Average pump prices are close to $3 as crude oil prices and seasonal demand are on the rise. On Monday, the national average gasoline price was $2.86, up 4 cents from a month ago and close to 80 cents higher than this time last year, according to AAA's Daily Fuel Gauge Report.
The U.S. Energy Information Administration predicts pump prices will top $3 a gallon at times this summer, but average $2.92 a gallon between April 1 and Sept. 30, the newspaper reported.
Texas' vast oil and gas industry benefited as crude prices passed $75 a barrel, making more projects feasible. But above $85, the pain on the broader economy begins to overwhelm those effects, according to Robert Gilmer, senior economist with the Federal Reserve Bank of Dallas.
"As oil prices move upward, they begin to become adverse for the national economy and adverse for some big pieces of the state economy for sure," he told the newspaper.
Record oil prices in the summer of 2008 pushed pump prices above $4 a gallon, and partly blamed for tipping the country into recession.
"Most economists would agree that there's a level at which those energy prices have a detrimental effect," Tillerson said. "We kind of saw an experiment with that over the last couple of years. Once you get north of somewhere between the $3 to $3.50 range, people do begin to alter their behavior, and when it gets even higher than that, some of that impact could be permanent in terms of the loss of demand."
Americans, he said, are more interested about understanding the complexities of the energy problem.
The petroleum CEO said recent efforts by President Barack Obama's administration to expand access to federal waters for offshore drilling "fall considerably short," but said on energy, the president's policy has been "about as good as anybody else has been."
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