Gasoline price roller coaster soars above $4 mark
CAPITAL REGION If you drove down Erie Boulevard in Schenectady, you probably felt it. If your commute took you through the intersection of Balltown Road and Nott Street East, you felt it. Or Route 50 in Glenville. Or Route 7 in Latham.
Chances are if you drove by any Mobil or Sunoco gas station in the region Tuesday, you felt it — that panicked, cringe-inducing realization that local gas prices have hit the $4 mark.
If you’re wondering, most gas stations aren’t profiting off your misery. They’ve been eating costs for about a month now, operators say, avoiding the $4 sticker shock for as long as they could as refinery closures drive prices higher.
“I think $4 is that dollar mark that makes you stop and take notice,” Stewart’s Shop spokesman Tom Mailey said Tuesday. “It’s different from $3.99. And you try to price your gas as best you can, so over the last couple of weeks, maybe months, a lot of gas has been sold below cost in an effort to keep a price that’s rational.”
Regular gasoline prices have risen 45 cents since mid-January to a national average of $3.75. While gas prices do tend to rise in the months before Memorial Day, the climb is steeper and faster than usual this year. And locally, New Yorkers are second only to Hawaiians for having to fork over the most cash at the pump.
On Tuesday, New Yorkers paid an average of $3.989 per gallon of regular unleaded gas, according to AAA’s daily fuel gauge report. This was up 5 cents from one week ago, 27 cents from one month ago and 11 cents from one year ago.
Capital Region drivers fared just a little better, paying an average of $3.93 per gallon Tuesday, up 5 cents from last week, 30 cents from one month ago and 10 cents from one year ago.
Mobil gas stations on Route 7 in Latham hit a regional high Tuesday of $4.09 per gallon. Stewart’s Shops, on the other hand, had some of the region’s lower prices, with gas hovering as low as $3.86 in Glenmont, an Albany County hamlet.
“When we price gasoline, we look at each station as its own market,” said Mailey. “So, we look at what our costs are and what our competitors are doing, and we try to keep the price as rational as we can.”
Prices are anything but rational right now, though, according to the Oil Price Information Service, a leading petroleum price and news service. Gasoline supply problems first began about a month ago, and continue to pinch unbranded chains with costs as much as 15 cents a gallon more than branded chains, according to this month’s Oil Express, a monthly OPIS newsletter for industry insiders.
Experts point to two main causes for the current spike: refinery shutdowns and an improving economy.
Refinery shutdowns and planned winter repairs have cut into gasoline supplies across the country. In particular, about 1 million barrels per day of refining capacity has been taken off line on the East Coast and St. Croix, according to a Tuesday CNBC report. And in January, Hess announced plans to close its refinery in Port Reading, N.J.
The United States’ slow but steady climb out of recession is another cause for the price spike, said Union College economics professor Stephen Schmidt.
“More people have jobs,” he said. “And those people are able to take vacations they weren’t able to take before and are driving and flying to get there. They’re able to move out of the cities and into suburbs and are commuting more to get to work. Or they’re able to buy a bigger car. Whenever people have a little bit more money, they will find ways to spend that money, and a lot of those ways end up increasing their consumption of oil.”
It adds up. Whenever the U.S. added jobs last year, crude oil prices rose. When job growth slowed in the middle of 2012, Brent crude oil prices hit their lowest levels of the year, according to a February report from the U.S. Energy Information Administration.
Over the last three months, the U.S. economy has added 200,000 jobs per month. Last month, Brent crude oil prices increased $4 a barrel to $112.35.
Prices aren’t likely to come down any time soon. As the calendar flips to March, experts agree that gas prices will likely rise heading into peak spring and summer driving seasons.