Irene raised demand for gas; prices up

Gas was $4.59 a gallon at one station in Smithtown... — Gas was $4.59 a gallon at one station in Smithtown yesterday. Regular on Long Island this week averaged $3.97. (Aug. 31, 2011) Credit: Ed Betz

By TOM INCANTALUPOtom.incantalupo@newsday.comAugust 31, 2011

The price of gasoline rose by 3.1 cents on Long Island in the past week as motorists topped off tanks and filled gas cans for generators in anticipation of shortages from Tropical Storm Irene, which curtailed operations at refineries, terminals and pipelines.

Regular averaged $3.967 in Nassau and Suffolk Wednesday, the AAA said -- almost $1.12 a gallon higher than a year earlier.

Irene interrupted operations at six East Coast refineries, including Conoco Phillips facility in Linden, N.J., according to the U.S. Department of Energy.

The department, the Oil Heat Institute of Long Island and the Long Island Gasoline Retailers Association said there were power failures -- since repaired -- at petroleum terminals in Lawrence, Inwood and Oyster Bay and that a gasoline terminal in Holtsville was without ethanol for a time to blend into the product.

Kevin Beyer, president of the gas retailers, estimated that about half his members' tanks ran dry at some point since Friday as motorists besieged them. "Thursday was busy, and Friday was just off the charts," said Beyer, who owns a station in Smithtown. He estimated that about a quarter of the Island's stations still had no electric power.

Some experts still think prices will decline after the three-day Labor Day weekend, with the end of vacation season and the lifting of clean-air requirements for more expensive summer gasoline.

"There's a historical pattern for things dropping off in September," said Sander Cohan, a principal and gasoline analyst at Energy Security Analysis Inc. in Wakefield, Mass.

But Carl Larry, director of energy derivatives and research at Blue Ocean Brokerage Llc in New York, points to interruptions from Irene, combined with anticipated higher demand for gasoline through Labor Day.

"We could see demand for gasoline and gasoline prices go higher in the next week or two," he said. He thinks residents in homes without power are more likely to take trips away for the weekend, but Cohan notes severe flooding and power outages exist in many upstate New York and Vermont leisure destinations.

MasterCard Advisors' weekly SpendingPulse report, issued Tuesday, said gasoline purchases in the regions along Irene's track last week were more than 4 percent above those a year earlier -- this after months of declines in purchases from year-ago levels.

The energy department said Wednesday that the nation's gasoline stocks ended last week 7.4 percent lower than a year earlier, at 208.6 million barrels, a sharp decline that sent gasoline futures upward in New York trading.