Gas prices fall, but demand stays weak

Gasoline prices are falling, but demand for the fuel isn't recovering from recessionary levels despite signs of an improving economy.

Although gasoline has slid from its recent peak in May -- by 73 cents on Long Island -- American drivers are using less than last year amid still-high unemployment, economic uncertainty and fuel prices that, while slipping, remain a potential budget-buster at well over $3 a gallon.

On Long Island, the average price for regular gasoline peaked for the year at $4.284 on May 12, the AAA said -- 6.2 cents shy of the record of $4.346 set July 8, 2008.

Thursday, the local average was $3.556.

But that's still almost 22 cents a gallon higher than a year ago. And home heating oil, which tipped back up over $4 a gallon in the latest weekly state survey, costs almost 15 percent more than a year ago.

"Everybody still is watching what they do because the economy is down," said Ute Pelz, 59, a mental health counselor from Commack who drives a Ford Explorer. "Bills are so high, nobody got a raise in a long time. . . . It's not just the gasoline prices."

Since late October, U.S. drivers have purchased between 3.5 percent and 4.5 percent less gasoline each week than a year earlier, except for last week, when the year-to-year decline was only 1.6 percent, according to MasterCard's SpendingPulse unit. The week's smaller decline was perhaps attributable to last-minute holiday shoppers driving to stores.

Figures aren't available for Long Island, but MasterCard said gasoline sales last week were down by 3 percent in the Central Atlantic region -- twice the national year-to-year decline. And New York tax officials say gasoline consumption statewide was 4.9 percent lower between April and October of this year than a year earlier.

At the consulting firm Energy Security Analysis Inc. in Wakefield, Mass., gasoline analyst Sander Cohan said national demand for gasoline peaked in 2007 at 9.28 million barrels a day, then fell by 3.2 percent in 2008 as the recession's grip tightened. It stayed flat through last year, but this year, despite signs of a recovering economy, demand has fallen again and probably will average 8.73 million barrels a day for the year, down 2.9 percent from last year, Cohan said.

"People are hurting economically and are looking for places to save," he said.

Dominick Chirichella, senior partner at the Energy Management Institute in Manhattan, noted that there still are at least 14 million Americans unemployed who are not buying gasoline for commuting.

"That demand is not price sensitive, it's employment sensitive," he said.

Long Island had 8,600 fewer jobs in November than a year earlier, and there were 97,200 Long Islanders unemployed and actively seeking work, according to the State Labor Department.