Gas prices hover near $4 a gallon on LI

Regular gasoline flirted with a $4 a gallon average on Long Island Wednesday as crude oil prices reversed course and rose in London and New York trading, dashing motorists' hopes for quick relief at the pumps.

U.S. crude for May delivery settled up 86 cents at $107.11 a barrel. In London, the benchmark Brent crude oil, the major ingredient for some of the gas sold on the U.S. East Coast, gained $1.96 to close at $122.88.

One reason for Wednesday's increases was a Department of Energy report showing gasoline stocks fell by 7 million barrels or 3.2 percent last week from the week before -- much more than experts expected.

"That was a big surprise to the industry," said Andy Lipow, president of the Houston consulting company Lipow Oil Associates Llc. Another factor, he said, is a reduction in imports of gasoline.

Experts say lower stocks and reduced imports result mostly from refinery downtime for maintenance, here and in Europe, and an unscheduled outage at a Sunoco refinery in Pennsylvania.

"That's going to translate into not much relief over the next couple of weeks," said commodities analyst and trader Stephen Schork, editor of The Schork Report.

Higher prices have encouraged conservation by American motorists but MasterCard's SpendingPulse report said demand fell by 1.8 percent last week from the week before. With conservation and restored supplies, prices could peak for the season sometime in May, Lipow said.

Crude oil futures, pushed upward by unrest in the Middle East and Libya, had dropped Monday and Tuesday by a total of $6.54 a barrel in the case of U.S. crude.

Regular gasoline averaged $3.989 a gallon in Nassau and Suffolk counties Wednesday morning, the AAA said. That average was last at $4 on Aug. 13, 2008. Its record high was $4.346, on July 8 of that year.

Already well above $4 is heating oil, which jumped by 18.3 cents a gallon on Long Island in the two weeks that ended Monday, to $4.238, according to the state Energy Research and Development Authority. It was as high as $4.93 in 2008 but that was in July.

Natural gas, when priced in a way that can be compared with heating oil, costs about $2.56 a gallon, estimates Kevin Rooney of the Oil Heat Institute of Long Island. But, he argues that environmental concerns about drilling for natural gas could reduce future supplies and raise prices. "Right now they have a significant price advantage, but it wasn't always the case and I don't think it always will be the case," he said.

With Reuters and Bloomberg