LI gas prices above $4, but relief soon
Gasoline climbed above $4 on Long Island this week for the first time since mid-May on higher crude oil costs and tight supplies of gasoline due to refinery shutdowns.
Experts say there should be some relief at the pumps in the weeks after Labor Day, Sept. 3, when demand usually falls off and cheaper-to-make winter gas begins entering the system.
Tom Kloza, chief oil analyst for the Oil Price Information Service in Wall, N.J., predicted that unless crude oil soars in price or a hurricane interrupts production, gasoline prices will drop, mostly from increased imports. More foreign refineries can produce winter gas than can produce the less-polluting summer gas required by clean-air laws, he said.
"There is room for gasoline to drop independent of crude," he said.
Longer term, he said, more of the gasoline produced for this region will be from North Dakota oil shale, which is cheaper than the foreign crudes now used.
Regular gasoline averaged $4.012 a gallon in Nassau and Suffolk Wednesday morning, the AAA said, up 2.2 cents from a week earlier, 38.2 cents since July 2 and 6.4 cents higher than a year earlier. Long Island's average for regular had declined from a recent peak of $4.169 on April 10 to a recent low of $3.63 on July 2.
Experts have blamed increases since then on higher crude oil prices and tight supplies of summer gas on the East Coast from the closures within the past year of three refineries -- one in the Caribbean and two in Pennsylvania. One of the Pennsylvania refineries, in Trainer, has been purchased by Delta Air Lines and is to resume operations after renovations.
Gasoline prices also have been climbing nationally -- Wednesday's average for regular was $3.716, said the AAA -- due to mishaps at refineries and a pipeline, including a fire Aug. 6 at Chevron's Richmond, Calif., refinery, along with higher crude prices.
The U.S. Department of Energy on Aug. 7 forecast that gasoline demand in 2012 would average 8.69 million barrels a day, down from 8.74 million last year and that next year consumption would fall again to 8.66 million barrels a day.
Tensions between the West and Iran had caused oil prices to soar earlier this year to almost $110 a barrel in February for the benchmark U.S. grade, but as those concerns eased and economic news worsened, crude oil fell, taking gasoline prices down with it. U.S. crude oil sank to as low as $77.69 a barrel on June 28. It settled Wednesday at $97.26 on the New York Mercantile Exchange, while the foreign crude used for gasoline production for this region closed at $114.64 in London.
The AAA survey is based on the lowest price available at stations that charge less for cash than credit card purchases.