LI's average gas price tops $5 a gallon for first time

The average price of a gallon of regular gas on Long Island on Wednesday was $5.003, the first time the price has topped $5 in the area, according to AAA.

The pain at the pump continues despite state and county fuel tax cuts that went into effect a week ago, and experts predict the price could well go higher still  — perhaps to $5.50 on the Island in July.

Record highs were also hit in the United States and in New York State overall Wednesday, with the average per-gallon price of regular gas reaching $4.955 and $4.988, respectively, according to AAA.

Blame the rising cost of crude oil, which is nearly twice as high as the price in August, and the increase in oil demand outpacing the tight supply, AAA said.

"The high prices we’re seeing seem to be having little to no effect on the driving habits of Americans," said Robert Sinclair Jr., spokesman in AAA's Garden City office.

The average per-gallon price of regular gas Wednesday on Long Island was 63% higher than it was a year ago, which was $3.072.

Brooklyn resident Donté Wilson, 26, on Wednesday fueled his Infiniti G37 at an Exxon gas station in Farmingdale, where the price of regular gas was $4.99 a gallon.

“I’m spending a lot, almost $200 a week on gas. … That is ridiculous,” he said.

Wilson is an independent contractor who drives his own car to deliver auto parts to stores on Long Island. He earns about $900 weekly, including a $25 stipend for gas, he said.

The rising costs are hitting his finances hard, but “I just started this job, so I’m grateful to even have a job,” he said.

Commack resident Frank Palmer, who is a salesman for a Farmingdale-based manufacturer and installer of windows and doors, was at the Exxon in Farmingdale on Wednesday fueling a Buick Envision SUV owned by his employer.

High gas costs have not affected how much he drives his own car for personal use but the rising costs have affected his company's operations, especially since diesel  powers the trucks that ship materials for the manufacturer, said Palmer, 59.

“A lot of that [extra cost] has been passed along to the customers,” he said.

The average per-gallon price of diesel on Long Island hit a record high of $6.652 May 20, according to AAA. The price Wednesday was $6.421, which is 96% higher than the price a year earlier.

Tax savings disappear

The state's and 24 counties’ fuel tax cuts went into effect June 1 to try to give drivers some relief at fuel pumps, but the total estimated savings — about 25 cents per gallon on Long Island — have not fully shown up in average gas prices.

The average per-gallon price of regular gas Wednesday on Long Island was about 4 cents more than the price a week earlier.

The state’s fuel "tax holiday," which ends in December, takes off 16 cents of the 33.35 cents of state fuel tax per gallon. There is an additional three-fourths of a cent of state sales tax suspension in the Metropolitan Commuter Transportation District, which covers New York City, Long Island and five other counties in the metro area.

Nassau and Suffolk counties enacted partial tax caps, with the 4.25% county sales tax rate being applied to the first $3 per gallon of gas, while the remaining amount is not taxed.

Nassau County estimated that the county tax cut would save the average consumer about 9 cents per gallon, based on a gallon of regular gas being priced at about $5. 

Nassau County’s tax cap will expire Dec. 31, while Suffolk County’s will expire Dec. 1.

How much higher?

It's hard to say where gas costs could go this summer because price movements in crude oil are hard to predict, fuel experts said.

“I’m afraid my answer is ‘anything goes.’ I see most of the increase taking place in July, where $5.50 might happen in Long Island and perhaps $5.25 [per gallon] nationally.,” said Tom Kloza, global head of energy analysis at the Oil Price Information Service in Rockville, Maryland.

The European Union's announcement of a ban on Russian crude imports, and the start of the summer driving season, could add another 10 cents to 20 cents per gallon, said Chris Lafakis, director of energy and climate economics at Moody’s Analytics in West Chester, Pennsylvania.

“Beyond that, it’s hard to tell,” he said.

Exacerbated price woes

Gas prices have been rising for more than a year as consumers’ demand for gas has been increasing as they return to driving for work and leisure during the COVID-19 pandemic, but crude oil output has not returned to the levels that existed before the pandemic hit the United States in early 2020.

Crude is refined to produce gasoline, diesel, jet fuel, heating oil and other petroleum products.

The price increases were exacerbated this year after Russia’s Feb. 24 invasion of Ukraine.

Russia was the third-largest producer of oil and other petroleum liquids in the world in 2021, according to the U.S. Energy Information Administration. 

The country produced 10.78 million barrels a day last year, and that accounted for 11% of the world's total, according to the agency.

But some countries and refineries stopped buying Russian oil because of the invasion. 

The EU announcing last week that it would phase out Russian oil imports is sending prices higher, fuel experts said.

“Oil was about $95 [per barrel] before that [EU ban] started to get priced in; we’re at $122 now. That’s a $27 increase, which raises the gas price by 65 cents per gallon,” Lafakis said.

Another factor in the rising prices is that gas stations in New York and other states are required to switch from winter blends to special summer blends of fuel, which have lower vapor pressure to reduce smog production, but they are more expensive because they are harder to refine, Lafakis said.

“That adds an extra 20-30 cents per gallon,” he said.

By Tory N. Parrish

tory.parrish@newsday.comToryParrish1

Tory N. Parrish covers retail and small business for Newsday. She has worked at the Pittsburgh Tribune-Review and Observer-Dispatch in Utica, N.Y.