|Joseph Petrowski is chief executive of Cumberland Farms Gulf Oil Group. (Kayana Szymczak for The Boston Globe)|
What fueled recent drop in gas prices?
Memorial Day weekend typically ushers in summer gas price increases along with the summer vacation season. Not so this year. Gas prices fell 15 cents last week, bringing the average for a gallon of unleaded to $3.85. Joseph Petrowski, chief executive of Framingham-based Cumberland Farms Gulf Oil Group, said he expects prices to fall further, dropping below $3.50 a gallon by July 4. Petrowski recently spoke with reporter Megan Woolhouse.
You predicted this week’s price drop two months ago. How?
I made the prediction that prices would drop when crude was about $112 a barrel. Some said it would go up to $130 or $140, and I said [on CNBC] that it would fall below $100 by Memorial Day. Goldman Sachs had put out a forecast that oil would go back up, and I said I didn’t see that. Six months ago, when oil was cheaper, I said we would go higher and we did. I’ve been right 100 percent of the time, but that’s just three predictions. I’m not going to quit my day job.
Why were you so confident about a decline in prices?
I would take the word confident out. It’s a reasoned prediction. At current prices, we’re seeing demand rationing of 4-5 percent. Usage is down year-on-year. Weather has also been a big component in demand destruction. We’re also seeing in Washington more of an appreciation of the need to address the supply issue. We’re seeing faster permitting on domestic drilling.
Do you see big changes in the kinds of fuel we use on the horizon?
I think we will see the advent of significant alternative fuels led by natural gas. I think that’s inevitable. It’s much cheaper. Today there’s about $1.50 a gallon spread, which means that it’s about $1.50 cheaper to buy compressed natural gas or liquid natural gas versus a gallon of petroleum. That’s an opportunity. What we lack is the infrastructure and the amount of vehicles.
You’re a proponent of alternative fuels, which seems strange for someone whose business is selling gas.
Gulf Oil is not a driller, nor do we refine. We are completely fuel agnostic. What we care about, since our assets are on the retail and distribution side, is that we have a low fuel price that’s not volatile, that is environmentally sound, and that our customers can afford. What the fuel is, I don’t care.
We have a natural gas station in Newark, and the Gulf station at Logan Airport carries E-85, which is 85 percent ethanol and 15 percent petroleum for flex-fuel vehicles. You won’t see charging stations for electric cars, but if electricity becomes a significant piece of our business, we don’t have to sell only through stations. We’ll have charging stations that might be at restaurants, malls, places you park for extended periods of time. If a business person said I’m going to do this the way I always did, Wells Fargo would still be a stagecoach company.
So diversifying our energy sources will help bring down the cost of gas?
How far gas prices drop is totally within our hands. If we diversify our transportation fuels to include a mix of electric, natural gas, as well as petroleum, and if we continue to push for higher mileage standards, and we encourage domestic production, which would include domestic drilling, then I think we can see total energy costs go back from a total of 18 percent of gross domestic product to 10 percent. That is a huge boon, a huge positive for the American consumer.
Domestic drilling is controversial, particularly in light of the BP disaster.
I don’t find it controversial. We lose 19,000 people in traffic accidents each year, which is horrible. We should punish bad drivers, drunk drivers. But no credible person says we’re going to shut down all driving in the US. We need energy to grow our economy.