We’ve watched it rise for 33 straight days now, and Wednesday the average price of regular gasoline crossed $4 a gallon in New York.
The reasons for the steady increase are as complicated as the formula for making the fuel. Part concern over uncertainties in the Middle East. Part a new gasoline mixture for the summer season. Part the higher cost of crude oil.
But gasoline prices also are rising because they can. We’ve shown we’re willing to pay 4 bucks or more a gallon.
“The thing is, the prices rise because no one stops it,” said Ralph Bombardiere, executive director of the New York State Association of Service Stations and Repair Shops.
Experts blame the higher cost at the pump on everything from refineries coming off-line for maintenance to Wall Street oil speculation, but the reasons for the rise in prices are mostly – and frustratingly – out of our control.
Higher gas prices, particularly when there’s a “4” in front of them, do spur us to change some of our travel habits. We carpool, use public transportation more and buy fuel-efficient vehicles.
But this tends to last only as long as the high prices, and gas station owners do everything they can to avoid crossing this emotional threshold.
“People get spooked by that $4 sign,” said Patrick DeHaan, senior petroleum analyst at GasBuddy.com, a website that tracks gas prices across the nation.
The price of gasoline has shot up by 24 cents over the last month – and 7 cents in just the last week – to an average of $3.97 for a gallon of regular at gas stations in the Buffalo area Wednesday, according to AAA’s Daily Fuel Gauge Report.
The price at some gas stations in Western New York reached as high as $4.09, as recorded on GasBuddy.com, well above the $3.84 average we were paying a year ago.
Statewide, motorists were paying $4 per gallon Wednesday, an increase of 28 cents over the price from a month ago.
Nationally, the average price of a gallon of regular has gone up 33 days in a row, the Washington Post reported, and it stood at $3.77 on Wednesday. That’s up by 46 cents from last month.
This price increase was more dramatic nationally than in the Buffalo Niagara region, a sign that we may have some “catching-up to do,” DeHaan said.
Prices here are significantly higher than in most other areas of the country, in part because New York is one of a “handful of states” that charges sales tax on top of federal and state gas excise taxes, said Steve Pacer, a spokesman for AAA of Western and Central New York.
This means we pay 18.4 cents per gallon in federal taxes along with 51 cents in state taxes – including the sales tax – per gallon.
“Our taxes are a little higher than many of our neighboring states,” Pacer said.
Drivers in Buffalo Niagara were paying a few pennies more than their counterparts in Rochester, Syracuse and Albany, but the disparity is nothing like what we’ve seen in past years.
Pacer also said Buffalo has fewer gasoline retailers than other parts of the state. While Rochester and Syracuse have 25 retailers in their vicinity, Buffalo Niagara has about 21. “We have fewer low-cost options,” he said.
But we do have access to some of the cheapest gas in the state, thanks to tax-free fuel sold on tribal land in the area.
Wednesday morning, the lowest price in the state was an outlier $3.61 at a Getty station in Brooklyn, but the next four cheapest prices in New York were all at stations on the Cattaraugus Indian Reservation in Irving, according to GasBuddy.com.
The overall rise in gas prices since the start of the year is perplexing to some experts.
“I’m not quite sure what’s happening here,” said Lawrence Southwick, a retired University at Buffalo economist, who noted that the wholesale price of gasoline rose last week even as the price of crude oil fell slightly.
The price of crude remains historically high, even though the world’s supply of oil is sufficient for the current level of demand, the Post reported, citing the International Energy Agency. The markets are worried about the standoff among the United States, Israel and Iran over Iran’s nuclear ambitions, but this isn’t anything new, analysts say.
“When was the last time there were no tensions in the Middle East?” Southwick said.
Pacer blamed the increase on rising cost of crude oil coupled with refineries switching over from making winter blend gasoline to summer blend.
“That costs more to make,” he said. “Also, a lot of refineries have to shut down to [switch over] to produce that.”
But Southwick said refineries should be able to prepare well in advance for these seasonal changes in the fuel blend.
The effect of Wall Street speculators on the price of oil has been hotly debated. The. Federal Trade Commission is studying the issue at the behest of Sen. Charles E. Schumer, D-N.Y., and others, but the FTC has yet to release the results of the review that began in 2011.
GasBuddy.com’s DeHaan said that both wholesale gasoline prices and oil have been going up because speculators are reacting to “positive sentiment” about the economy. He said he wouldn’t be surprised to see the prices fall back “just like the stock market when, after a few good days, people start selling.”
Gas prices are stubbornly rising even as demand in this country continues its post-recession decline. Gas consumption fell by 2 percent in the United States last year, Bombardiere said.
Where will it stop? The rise in prices in early 2011 and again in 2012 prompted fears of gas selling for $4.50 or $5 per gallon, but prices still haven’t hit the records highs from the summer of 2008.
AAA’s national officers are predicting that prices will continue to slowly rise until about early April.
Last year, the peak prices came April 5, when the national average was $3.93. In Buffalo, the peak price was $4.12, coming April 17.
“I can’t see a sustained upward climb to $5, or $4.50,” Bombardiere said, “unless there’s a true emergency.”