Until the available supply meets America's unquenchable thirst for gasoline, the prices at the pump are not likely to drop much, the head of the country's second largest petroleum refiner said Wednesday.
“It is true that gasoline prices move with oil prices, but ... demand continues to go up. Even with gas prices over $3 per gallon, demand continues to go up. That's really quite surprising,” James Mulva, chairman and CEO of Houston-based ConocoPhillips, said during an exclusive interview on TODAY.
“The issue is providing supply. We are running our refineries at capacity ... We are importing as much as we can,” Mulva told TODAY host Matt Lauer.
Currently, the average price of gasoline nationally stands at $3.20 per gallon. Illinois' residents pay the most: about $3.50 per gallon, on average. New Jersey's gas prices are the lowest: about $2.96 per gallon.
Addicted to gas?
As Mulva sees it, the rising price of gasoline during a period of time when a barrel of oil has dropped by $10 is explained by the inability of companies like his to keep enough American-made gasoline flowing.
His company recently had two refining units down due to a lightning strike and a third went off-line when it lost electricity supplied by a local utility company. Imported gasoline costs more, but the companies have to do it to keep the tanks fuel, he said.
When supply cannot meet demand, prices go up. Everyone knows that.
So why, with gas prices sky high, aren't Americans leaving their cars in the garage and taking the bus?
“I know you wouldn't want to say anything that's going to anger the American people, but the fact of the matter is, it's our fault,” Lauer said, setting up a question. “The fact is, we're addicted to gasoline. We're simply using too much of it and we're paying the price. Isn't that a fair statement?”
“In a way, it is a fair statement,” Mulva said. “If you look at the United States, the past 100 years or so, we have been blessed with a plentiful energy supply, and we're providing energy at a very affordable price. But that's changed.”
Noting that ConocoPhillips' profits have risen from $4.7 billion to $15.6 billion over the last year, Lauer questioned why Americans shouldn't get the feeling that there is a direct correlation between profit and price hikes.
“We invest it right back into growing supply, oil production, gas production and refining capacity,” Mulva insisted.
He added that with a small measure of conservation and a bit of cooperation from Mother Nature following a relatively quiet hurricane season last year, prices should moderate and hopefully decline this summer.
There is some evidence that motorists are willing to do their part to curb demand for gasoline. More than a third of American drivers recently surveyed by Consumer Reports magazine said they are considering switching over to smaller, more-fuel efficient vehicles. Of those drivers, about half said they would consider a gas-electric hybrid, the magazine reported.