Long Island gas prices rise more than 12 cents in last week, AAA says, spurred by Iran war

Gasoline prices on Long Island rose more than 12 cents a gallon over the last week, pushed by the U.S.-Israeli war with Iran, which has choked oil exports from the Persian Gulf, as well as seasonal factors, according to AAA.

By Monday morning, the auto club put the average price per gallon at just under $4.13. Gas Buddy put the average at $4.09, the highest in 12 months, though well off the $5.05 highest average price the AAA recorded for the region in 2022 after Russia’s invasion of Ukraine. The national average has dropped since early April and was $4.11 on Monday, according to AAA.

Gas prices — advertised on almost every commercial road — are key to consumer confidence, especially on Long Island, where there are more cars than households. Crude oil cost is the major driver of retail gasoline prices, and it has surged since the start of the Iran war because of disruption to production and shipping of oil and gas in the Persian Gulf. The threat of Iranian attacks on shipping has essentially closed the Strait of Hormuz, through which about 20% of the world’s daily crude diet passed before the war’s start.

On Monday, regional officials said Iran had offered to reopen the strait if the United States lifted its blockade on the country and the war ended, but even a durable peace would have limited impact on near-term retail gasoline prices, said Robert Sinclair Jr., spokesman for AAA Northeast.

“Even if it [the Strait of Hormuz] were to open immediately and tankers were operating at the speed of small motorboats, it wouldn’t do much to relieve the situation, because there’s been so much damage to oil and gas infrastructure in and around the Middle East,” he said. “It’s going to take billions of dollars and months — if not years — to repair all those facilities and get them back up and running.”

On Monday, West Texas Intermediate crude traded at about $96, up roughly 44% since the start of the war on Feb. 28.

Separate from crude pricing is a cyclical factor: Long Island, along with much of the tristate area, is in the middle of a seasonal switch to reformulated gasoline, which is blended to reduce smog and toxic pollutants in the summer but adds 15 to 25 cents to the retail cost per gallon.

While the immediate effect of closure of the Strait of Hormuz was felt by China and other nations that bought oil and related products directly from Iran, even the United States — the world’s largest oil producer, which does not buy directly from Iran — has felt a "spillover" effect, said Vidya Mani, a visiting professor at Cornell University who researches supply chains.

Existing inventories of petroleum products across much of the world are "depleting very quickly," she said. Should the strait remain closed "maybe a couple of weeks, then you’re going to see not just oil prices going up, you’re going to see a lot of the things that oil feeds into — chemicals, plastics, aluminum — all of these industries will run through their inventories."

The U.S. Energy Information Administration’s last available short-term energy outlook, from April 6, predicted retail gasoline prices would peak at $4.30 in April and average more than $3.70 this year, but that outlook assumed that war would not continue into May and that traffic through the Strait of Hormuz would gradually resume.

By Nicholas Spangler

nicholas.spangler@newsday.comspanglernewsday

Nicholas Spangler is a general assignment reporter and has worked at Newsday since 2010.