Can consumers look forward to higher gasoline prices at the pump in 2012? Almost certainly, say the experts. But one petroleum insider believes help for consumers could be on the way this year.
In an interview with business cable channel CNBC, Gulf Oil CEO Joe Petrowsky says the huge price spread between oil and natural gas means the industry will accelerate the move to begin running cars and trucks on cheaper and more plentiful natural gas. That, in turn, he says will eventually keep oil from becoming ever more expensive.
“The only thing long term that will keep oil prices from spiking much, much higher is abundance of natural gas and I think a lot of people in our industry are investing in ways to let natural gas become a transport fuel,” Petrowski said. That will be the story in 2012 that starts bubbling to the surface. Hopefully we can diversify away from petroleum as the only transport fuel.”
Petrowski is putting his money where his mouth is, saying Gulf plans to switch a number of its trucks this year to run on natural gas. The payoff, he says, will be immediate.
“If we were posting natural gas today as a transport fuel to replace diesel, we'd be posting $2 a gallon,” Petrowsky said. “That's $2 a gallon cheaper than diesel right now in the northeast. Our average truck uses 12,000 gallons a year. That's $24,000 in savings per truck.”
Prices moving in different directions
As oil prices have remained high, for the most part, since 2008, the price of natural gas has been coming down. The price spread, says Petrowsky, is a product of a huge increase in natural gas supplies.
“You've got an incredible amount of production coming out of the various shale fields,” he said.
An best of all, those natural gas shale fields are mostly located in the U.S., reducing the need for imports and supplying domestic jobs. In North Dakota, site of one of the largest natural gas fields in the U.S., unemployment is running at just 3.3 percent.
While there remain a number of economic and technological hurdles to using natural gas to power passenger vehicles in great numbers, it's much easier and cost effective to convert commercial vehicles like trucks and buses. But once the process begins, says Patrowski, oil will no longer be the exclusive motor fuel, and consumers will reap the benefit.
“The way crude oil is going to come down (in price) is when we link natural gas to the transport sector,” he said. “We really need to do that and I think that will be the story of 2012.”