Dow sees crude prices hurting U.S. economy

NEW YORK (Reuters) - The soaring cost of crude oil, coupled with the ongoing crisis in the housing market is pressuring the U.S. economy and changing consumer behavior, Dow Chemical Co Chief Executive Andrew Liveris, said in an interview on Friday.

"Inflationary pressures on the (U.S.) consumer through gasoline prices and food prices have reached the point where the consumer is clearly changing behavior," said Liveris told Reuters.

"The weakness in the United States economy in housing that we have read about for over a year, (along) with the mortgage crises and credit crunch was one blow. But, oil is another blow, and its probably one blow too many," he said.

Dow Chemical (DOW.N), the largest U.S. chemical maker, has seen its energy and hydrocarbon-based raw material costs now account for about one-half of the company's total costs.

In 2007, Dow's feedstock and energy costs rose $2.5 billion to $24.6 billion.

Dow is within days of making statements about the sorts of actions it intends taking to deal with the cost escalation, he said, declining to specify those steps.

The company has considered the implementation of an energy surcharge, but is unlikely to adopt this strategy, Liveris said.

Chemicals maker Rohm and Haas Co ROH.N said last month it would apply a raw material and energy surcharge to products made by its specialty materials businesses in an effort to keep pace with raw material costs.

Dow's specialty chemical and plastics businesses have been hurt in recent quarters, as price increases on its products have been unable to keep pace with the level of cost escalation in raw materials.

He said it was "ludicrous" that the United States was not allowing drilling off the coast of Florida for natural gas and oil.

There is no short-term fix to the price escalation, but more drilling needs to get done and more refineries need to be built, said Liveris.

"In fact, it's almost the reverse under the current Congress, which is a joke," he said.

"We're letting everyone else drill with our technology and we are not doing it ourselves. To me that is the insane asylum being run by lunatics," Liveris said.

(Editing by Jeffrey Benkoe, Leslie Gevirtz)