LI gas prices at mercy of Middle East upheaval

Gasoline prices slipped by a fraction of a cent in the past week on Long Island, while heating oil was unchanged, but experts are forecasting still-higher prices for gasoline as conflict in Libya keeps its oil off the market, and unrest in Bahrain, Yemen and Syria increase fears of a major supply disruption.

Wire services Tuesday quoted Iraq's oil minister Abdul-Kareem Luaibi as saying that the OPEC cartel believes that light sweet crude oil, which settled Tuesday up $1.67 at $104 in New York trading, will approach $120 a barrel. That could add another 35 cents a gallon to the price of gasoline, says Richard Soultanian, president of NUS Consulting of Park Ridge, N.J., an energy cost management consultant. "I think in the near term consumers are going to see much more expensive gas at the pump," he said.

Tuesday, regular averaged $3.781 a gallon in Nassau and Suffolk, the AAA said. Prices have been stable for almost two weeks at their highest level in two years and their highest ever in winter. The average Tuesday was more than 83 cents above a year earlier.

But Soultanian thinks the $4-a-gallon mark -- already exceeded for premium grades at many local stations -- is a psychological barrier at which consumers will curtail driving and cut back on discretionary spending -- a cutback that, he said, would exert downward pressure on fuel prices but also threaten the entire economy.

Tuesday's SpendingPulse report, from a unit of MasterCard, found gasoline consumption up by 1.7 percent last week from the week before, but 1 percent below the level a year earlier. "March normally tends to show a pickup in gasoline demand as warmer weather combined with spring break vacations increases gasoline demand after January and February," said MasterCard analyst John Gamel, "so the low levels of week-to-week growth, and continued year-over-year declines are worth noting."

Heating oil at full-service dealers on Long Island was unchanged on Monday from the week before at $4.045 a gallon.

Libya produced only about 2 percent of the world's oil, but experts like oil industry consultant Andy Lipow, based in Houston, say it's of very high quality and not easily replaced. "My expectation is that Libyan crude oil is going to be off the market for a substantial amount of time even if the violence were to cease shortly," Lipow said.

This story was supplemented with reports from The Associated Press and Bloomberg News.