Gas prices rising fast as demand increases, production falls

Rising gas prices will have Greg Loiacano rethinking his vacation plans in a few weeks if the numbers don’t start to move in a different direction.

"Now that beaches will be opening up, I’ll be rethinking my holiday travel," the Northport resident, 45, said Wednesday afternoon before putting gas in his Chevy Camaro at a BP gas station in Farmingdale.

Gas prices nationwide have been rising for weeks, reaching levels not seen since spring 2019.

On Thursday, the average price of a gallon of regular gasoline on Long Island was $2.88, which was 25 cents more than the price a month earlier and 50 cents more than the price a year prior, according to AAA.

The average price of gas nationally Thursday was $2.88, which was 30 cents more than the price the month prior and 66 cents higher than the price a year earlier.

The national average was last this high on May 8, 2019, at $2.8832.

Several factors are at play in gas prices rising, including the improving economy and consumers driving more as state and local governments lift business restrictions related to the COVID-19 pandemic.

"Additionally, we are in the midst of switching over to summer blends of gasoline, which started March 15. Summer gas is blended to have a lower vapor pressure, so it won’t evaporate in the heat … helping to cut pollution," said Robert Sinclair Jr., spokesman for AAA.

Since those blends, which are produced annually, are harder to refine, they’re more expensive, he said.

But the most significant factor in rising gas prices is foreign crude oil producers, mostly Saudi Arabia and Russia, reducing output to raise crude prices, which in turn raises gasoline prices, energy experts said.

Saudi Arabia, which is the world’s largest exporter of crude oil, is having the biggest impact, said Tom Kloza, global head of energy analysis in the Wall, New Jersey, office of the Oil Price Information Service, which is headquartered in Gaithersburg, Maryland.

Saudi Arabian crude oil producers cut output for February, March and April, he said.

"Everybody can dance around this and say that demand is coming back. But this is really supply driven and this is driven by the Saudi’s reticence to return some production," Kloza said.

Despite some chatter to the contrary, the price of gas is not increasing as a result of who is occupying the White House, experts said.

"It has nothing to do with the Biden administration. … Nothing to do with the Trump administration," Kloza said.

The pandemic led to millions of Americans working from home as businesses deemed nonessential were government-mandated to shut down for months, starting last March, to help stop the spread of the virus.

Over the course of the year, Gov. Andrew M. Cuomo and other states’ elected officials have lifted some or most of those restrictions, which has put more people back on the road.

So, demand for gas has risen.

"In fact, for last week compared to the week before, there was an additional roughly 500,000 barrels of demand" for oil, Sinclair said.

Demand rose from 8.15 million barrels a day for the week ending March 5 to 8.73 million barrels a day for the week ending March 12, he said.

He expects gas prices to keep rising for a few more weeks.

The national per-gallon retail price for regular gas is projected to average $2.53 in the first quarter of this year, and rise to $2.80 in the second quarter, according to the U.S. Energy Information Administration.

The Washington, D.C.-based agency projects that the price will fall to $2.62 in the third quarter.

By Tory N. Parrish

tory.parrish@newsday.com@ToryParrish1

Tory N. Parrish covers retail and small business for Newsday. She has worked at the Pittsburgh Tribune-Review and Observer-Dispatch in Utica, N.Y.