Special Guests: Joe Petrowski - Gulf Oil CEO

NEIL CAVUTO, HOST: Oil losing about 6.5 percent today. It's down more than 15 percent over the past month, you know, not all that far from a 70-something buck a barrel handle. But here's the crude reality. Gas prices so far are not falling. In fact, month over month, they're actually ticking up a little bit. Gulf Oil CEO Joe Petrowski says expect that to change soon. Actually, Joe, it should have happened sooner. Why not? Can you hear me, Joe?

JOE PETROWSKI, GULF OIL CEO: Yeah, I can hear you fine. I don't know if it should have happened sooner. Prices, at least in our system, are down about eight cents, week on week. Some of the government data, Neil, you're looking at lags. I have no doubt that if oil prices stay here and they go lower, as I expect they would be, we'll see much lower retail gasoline prices going into Labor Day. Retail prices are always sticky.

CAVUTO: -- 81 dollar a barrel level, how would that roughly -- I know it is a mugs game. How would it roughly translate into gasoline? You would be looking at high two something handle, tops?

PETROWSKI: Probably not, no. First of all, it depends where. If you're in the mid continent, you probably could see prices in the high two dollars, low three dollars. But on the coast, because we're using imported oil because a lot of the WTI of which that 80 dollars is based on is land- locked and doesn't make it to either the Gulf Coast refineries or the east coast refineries that process the higher imported oil. It won't go down as much.

CAVUTO: We should just say the higher imported oil is the Brent North Sea crude. That is 112 to 115 a barrel range, right?

PETROWSKI: Right. I would expect that to come down too, as WTI, the more domestic crude, comes down. You will have lower prices in the Midwest. Look it, back in December of '08, retail gasoline prices that 90 days earlier were over four dollars were a 1.71 in December of '08. And should we get a break that severe -- and I don't think we go much below 70 on oil, depending on the financial situation -- you will get significant oil prices coming down on the retail basis. There is little doubt about that.

CAVUTO: Is this a recession?

PETROWSKI: Our June and July figures would tell us that basis driving and consumption, especially on the diesel side, the West Coast Pat-5 consumption was down quite a bit. Yes, I would say, June or July I would be surprised if output was really up. The numbers may say something different. I know the classic definition of a recession is two successive quarters of no growth. But I would be shocked, based on the data that we see, that July's growth was up year on year. I think it was down year on year.

CAVUTO: Joe, as a CEO, how do you think the president responded to this crisis today?

PETROWSKI: I don't think you really should go out as a CEO, as a leader, and really to start to talk unless you have something substantive to say. And there wasn't very much new today. And I think that does make the president look weak. And I also would not overreact.

I mean it's a big drop. It is the sixth biggest drop in the Dow in history. But markets go up. Markets grow down. And I think a little bit of calmness would have been a little better and maybe some specific policies to address the problems. Blaming -- blaming the downgrade on the S&P, even though I do think it was ridiculous, is not constructive.

We have too much debt. The trajectory of our debt is growing. And whether you're a private individual or whether you're a corporation, it is not a sustainable level. And the discussion should have been around that and what we're going to do to address that problem long term. We do have a jobs problem. We have a growth problem in this country.

CAVUTO: Right.

PETROWSKI: And -- and, just pointing fingers, whether it is at the Tea Party, whether it is at S&P, is just not -- it is not what a good leader does in a time of -- like this.

CAVUTO: Thank you, Joe. Good seeing you again.