Higher LI gas, oil prices add to consumers' tax pinch
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The price of regular gasoline on Long Island has climbed to more than $4 a gallon and could head higher, hitting pocketbooks already squeezed by higher payroll taxes and a cold, expensive season for heating oil.
Prices could rise another 10 cents in the next week, an analyst said, as global demand pushes up crude oil prices, and as refineries that supply the region go through seasonal maintenance.
A gallon of regular gasoline averaged $4.026 on the Island Tuesday, up 28.5 cents from a month earlier, according to the AAA Daily Fuel Gauge Report.
Prices are on their most sustained rise since the days following superstorm Sandy. Regular gas hit $4 a gallon here on Valentine's Day, and since then has only been below that mark for a single day, the AAA reported. Prices remain below the $4.168 level they reached in early November, after Sandy disrupted supplies.
The latest increase in prices is partly due to supply limitations as oil refineries enter a regular maintenance period, gasoline analysts said.
But growing demand for gas from China, as well as increases in crude oil futures due to more bullish economic news, are also pushing prices higher than usual, said Andy Lipow, president of Houston-based consultancy Lipow Oil Associates Llc. "I'm expecting gas prices to still go up another 10 cents a gallon here over next week," he said.
Carl Larry, president of Oil Outlooks and Opinions Llc in Irvington, N.Y., said local gas prices could in an extreme scenario reach $4.15 a gallon, though he expected prices to more likely hover around $4 for the time being.
Long Islanders were already feeling the higher prices Tuesday at gas stations.
Rob Ridgwell, 43, a carpenter from East Meadow, said he has no choice but to fill up his gas tank because his job takes him all across the Island. Tuesday, he had to drive to Farmingdale and Oceanside for work.
"This gas I am putting in now, it's all out of my pocket," Ridgwell said as he filled up his van at a Gulf station in Farmingdale, where a regular gallon was $4.059 for cash. He added that he spends at least $60 to $70 a week on gas.
Higher gas prices are striking as consumers already feel the pinch from the end of a two-year payroll tax cut. The expiration of the tax holiday this year will make a $1,000 dent in take-home pay for households earning $50,000 a year.
That pinch may hurt more with the cost of heating oil on the rise amid an especially cold winter, said Pearl Kamer, chief economist for the Long Island Association. The average price for a gallon of heating oil on Long Island was $4.347 last week, up 12.5 cents from the same period last year.
"It certainly will mean that consumer spending on Long Island will be very lackluster, probably in February and March," she said. "People have used their holiday gift cards, they snagged their bargains, I expect they'll pull back now."
The announcement in late January that Hess Corp. would shut down its Port Reading refinery in New Jersey has also pushed gas prices higher this year, said Chris Barber, a gasoline analyst at Energy Security Analysis Inc. in Wakefield, Mass. But the effect of the closure could be mitigated by the expansion of a Colonial Pipeline Co. supply line from the Gulf Coast to the Northeast, he added.
Gasoline analysts said they expect gas prices to drop in late March, before increasing again in April as gas stations switch to a higher-grade summer mixture that is more expensive.
With Chau Lam