Several factors drive up LI gas prices
Mobil gas pumps display prices at full- and self-service pumps in Long Beach. (Feb. 1, 2012) Credit: Albert Orlando
Gasoline prices rose by more than 20 cents a gallon on Long Island in January, from a higher state tax, the end of a federal subsidy and fear of tight supplies in coming months.
Those factors drove up prices despite ample stocks and sluggish demand for fuel.
Regular gasoline averaged $3.796 a gallon on Long Island Wednesday, according to the AAA, up 23.4 cents from a month earlier and 7.2 cents higher than a week earlier.
Yet demand, nationally and in the mid-Atlantic region, fell more than 5 percent last week from a year earlier, according to MasterCard's SpendingPulse unit.
Meanwhile, the U.S. Department of Energy said gasoline stockpiles nationally last week were only 2.6 percent lower than a year ago at 230.1 million barrels. On the East Coast, supplies were up by 4.3 percent, to 62.6 million barrels.
In the Northeast region, experts said rising pump prices reflect investor expectations of gasoline shortages following the closures late last year of two Philadelphia-area refineries and the anticipated closure in coming months of another in that area. The three account for about half the Northeast's refining capacity, according to the energy department.
Adding to the concerns are plans to close another refinery this month that serves this region, located in the Virgin Islands.
"While clearly there are more than adequate supplies, what people are worried about is what happens in the summer," said Andy Lipow, president of Houston consulting company Lipow Oil Associates Llc.
The value of gasoline and oil changes daily regardless of when it was pumped from the ground and refined, he said. So fears of shortages that affect futures prices can quickly boost local wholesale and pump prices.
Until the beginning of the new year, gasoline prices locally had been declining almost steadily since the recent peak average for regular of $4.284 on May 12.
The record average in the AAA Long Island gasoline price survey is $4.346 set July 8, 2008.
Also boosting prices were an increase of almost a penny a gallon effective Jan. 1 in the state petroleum business tax, and the end of a 4.5-cent-a-gallon federal subsidy for ethanol blending.
