US gasoline prices trim demand - ExxonMobil CEO

15 May 2008 14:31  [Source: ICIS news]

HOUSTON (ICIS news)--The increase in US gasoline prices to a record high appears to have started to trim demand, ExxonMobil chairman and CEO Rex Tillerson said on Thursday.

 

"We are already seeing some demand slackening," Tillerson said in a television interview.

 

"We are already near, if not at, the price where people are changing their behaviour," Tillerson said. "That's going to put pressure on prices."

 

Although relatively low compared with other developed countries, US gasoline prices have become a daily discussion point in the media, from the presidential election campaign trail to late-night television monologues.

 

The gasoline market has also put upward pressure on many chemical markets by tilting refinery economics and pulling on the aromatics pool.

 

The Energy Information Administration reported on Wednesday that average retail gasoline prices have reached a record 372.2 cents/gal, after seven consecutive weeks of increase. 

 

Tillerson acknowledged many people in the US did not have a "discretionary choice" to stop driving, because many cities did not have viable mass transit alternatives.

 

While he would not be drawn on what point retail prices might trigger a slump in demand, Tillerson said that in previous cycles there had been dramatic collapses in prices for crude oil and gasoline.

 

"It's very hard to predict... how precipitous would a correction be? It could be dramatic, it could be gradual," he said. "This is a demand-driven price run-up, no question about it."

 

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By: Stephen Burns
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