Tags: Gulf | Gasoline | prices | Sales

Gulf Oil CEO: Pricey Gasoline Hurting Retail Sales

Monday, 26 March 2012 03:00 PM

Gasoline prices have risen so high that consumers are skipping other purchases in the convenient stores at service stations, says Gulf Oil CEO Joe Petrowski.

The national average for a gallon of regular gasoline rose to $3.9297, according to the nationwide Lundberg Survey of about 2,500 gasoline retailers in the continental United States. Prices will keep climbing as the summer approaches, possibly as high as $4.40 a gallon, Petrowski says.

Economists have worried that consumers will crimp spending in order to fill up their cars, which could hurt recovery, and that's already the case at Gulf's convenience stores.

"We watch closely at the 600 stores we own and operate," Petrowski tells CNBC. "We’re starting to see, like in 2008, some resistance."

Close to 165,000 gas stations in the United States are owned and operated by small businesses, and they suffer from gasoline price hikes, too, as they make most of their money on retail sales.

"Legend has it they like to make money at the pump. The reality is they sometimes use gasoline as a loss leader to bring you inside the store," Petrowski says.

Tensions with Iran are exacerbating rising gasoline prices, with the West sanctioning Tehran for its nuclear ambitions, which have already disrupted the flow of oil out of the Middle East country.

Iran has said it might counter sanctions by closing the Strait of Hormuz, a narrow waterway connecting oil rich Persian Gulf countries with the rest of the world.

Talk of military strikes also persists, which forecasting firm IHS Global Insight says could send gasoline climbing to $7 a gallon if the strait were closed for long.

"Iran's leaders have done things that we expect rational leaders to avoid doing," Farid Abolfathi of IHS told clients in a recent presentation, according to U.S. News & World Report.

"They might miscalculate or misjudge their chances of success."

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Monday, 26 March 2012 03:00 PM
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