LI gas, fuel oil prices dip -- for now

By TOM INCANTALUPOtom.incantalupo@newsday.comMarch 17, 2011

Heating oil fell an average of more than 2 cents a gallon on Long Island in the week that ended Monday as the weather warmed, and gasoline prices slipped a fraction of a cent Wednesday from the previous day. But crude oil futures rose on more unrest in the Middle East and then pulled back on the apparently worsening catastrophe in Japan.

The slight relief for local drivers and homeowners might be short-lived, depending on where crude oil prices go from here.

They rose early Wednesday on news of a government crackdown on protesters in Bahrain, which seems to have replaced Libya as a subject of investor concern because Moammar Gadhafi appears victorious over the rebels in his country. There also were street protests in Yemen, Syria and Algeria Wednesday.

Oil for April delivery settled up 80 cents at $97.98 a barrel on the New York Mercantile Exchange. Stephen Schork, editor of the energy newsletter The Schork Report, says Bahrain is not a major oil supplier but traders worry about spreading unrest among Shia Muslims in a region politically dominated by Sunnis. "The predominant oil exporters are all Sunni," he said. That includes Saudi Arabia, which has sent troops to help quell the uprising in adjacent Bahrain.

But although crude oil futures touched $99.60 at one point Wednesday, they were dragged back by the social, economic and nuclear crisis in Japan, which traders believe will, at least in the short term, reduce demand for oil by the world's third largest economy. Also weighing on oil prices were U.S. government reports of a decline in new home construction and a rise in wholesale prices.

Schork said the slight dip in gasoline prices locally probably was a result of the last of the cheaper winter-grade gasolines being dumped on the market to make room in storage for more expensive summer grade gasolines.

Regular averaged $3.785 a gallon on Long Island, the AAA said -- representing the first daily drop since Feb. 8. But the new average still is 2.7 cents higher than a week earlier and 85.2 cents higher than a year earlier.

Heating oil prices, Schork said, should be going down at this time of year. "We're at the tail end of the [heating] season right now," he said. The new Long Island average -- $4.045 a gallon -- represented the first decline since March 29 and is almost 93 cents a gallon higher than a year earlier.

Americans are responding to higher gasoline prices by using a little less, according to a weekly report by a unit of MasterCard that tracks gasoline purchases; the SpendingPulse report issued Tuesday said drivers purchased almost 1 percent less last week than a year earlier, or about 64 million barrels, though that was more than the week before as better weather brought the seasonal increase in driving.