This is a rush transcript from "Your World," March 22, 2011. This copy may not be in its final form and may be updated.
NEIL CAVUTO, HOST OF "YOUR WORLD": Oil spiking as the battle in Libya just keeps raging now and unrest in the Mideast keeps spreading. Now our president is pushing for more drilling, as you might have heard, in Brazil.
My next guest sees a bit of a double standard. Joe Petrowski is the CEO of Gulf Oil.
Good to have you in the flesh.
JOSEPH PETROWSKI, CEO, GULF OIL: Great to be here.
CAVUTO: So, you are not a fan of this, but partly a fan of the goal. Explain.
PETROWSKI: Well, I think any drilling, or any new production, especially if new production is outside of the Mideast that's inherently unstable and probably going to get more unstable as we move forward, is a positive.
But why Brazil, when we could have the jobs and the foreign exchange in this country, is rather puzzling and I'd say somewhat humorous. What is the -- what is it about Brazil that they have that we don't have?
CAVUTO: What do you think it is? Cynically, a lot of people are saying, well, you know, Petrobras, the big Brazilian oil concern, has a big investor in one George Soros, big Democratic backer, big Democratic cause backer. So, cynically, a lot of people, say, oh, it is a bennie for a friend.
What do you say?
PETROWSKI: Well, I don't know that. It could be.
But I think what concerns me, in addition to we're going to lose the jobs and in addition to not having the foreign exchanges, we are also -- one of the untold problems, I think, in the world oil markets, besides we are getting too much of our oil from the Mideast, is 75 percent of our oil is being produced by government-run entities. Petrobras...
CAVUTO: Is that so, really?
PETROWSKI: Seventy-five percent.
PETROWSKI: And Petrobras, PDVSA in Venezuela, Pemex in Mexico. And I just have a theory that -- that private companies are going to be more efficient at finding it and getting it out at a more reasonable price than state-owned companies.
CAVUTO: So you think we could get screwed here?
PETROWSKI: Well, again, more oil that is not concentrated in the Mideast is good for the world and good for America. It would be a lot better if we had the drilling here.
And it seems a double standard and it seems somewhat hypocritical to a country that desperately needs jobs -- and we need them here -- that we're -- we're encouraging other countries to create the jobs that -- what we need.
CAVUTO: People would be listening to you now and say, well, this is just another oil giant, who's just sitting on these higher oil prices and loving it.
But we should explain to folks that they hit you hard, because you're a distributor, right?
PETROWSKI: We are a distributor. We have...
CAVUTO: Explain what that means.
PETROWSKI: We sold -- we got out of our E&P when Gulf merged with Chevron back in the late '80s. And we sold our last refinery in the early '90s. So we don't refine and we don't drill. We do distribute to...
CAVUTO: So, when that goes up, you're -- you're hit.
PETROWSKI: We make less -- we make less money when the prices go up.
And because we run through our Cumberland Farms subsidiary 600 stores, we see firsthand the impact of higher oil prices.
CAVUTO: And what do you see? People pull back a little, only get a fixed amount? What?
PETROWSKI: Oh, we're seeing it now. In certain places, where driving is somewhat discretionary like Florida, we are starting to see some demand rationing in Florida.
PETROWSKI: Oh, yes.
CAVUTO: Voluntarily so?
PETROWSKI: Voluntarily so.
PETROWSKI: But the thing about oil is it is a very inelastic commodity. So a two million to three million barrel shortfall, either because our demand is up here or the Libyan supply, creates an eight to nine times effects on price.
So, we're forecasting prices to be $112 WTI for the coming calendar...
PETROWSKI: ... without a major disruption in Saudi Arabia.