After gas prices soared to new highs, crossing the $5 mark last month, fuel costs have gone in the other direction. The question now is how low they will go and how long they will stay there.
Gas prices nationwide have fallen every day for three months — 95 straight days through Sunday on Long Island — to be exact, energy industry experts said, due to weak consumer demand and oil prices, growing recession worries, the slow implementation of European sanctions on Russian oil imports and other factors.
The average price of a gallon of regular gas on Long Island on Sunday was $3.510, down 30% from June 15 when it hit a record high of $5.046, according to AAA. A year ago the price was $3.282 per gallon.
According to a gas interest rate comparison app, several stations in Suffolk County were charging $3.09 on Sunday, and one in Farmingdale was charging $2.99.
Experts’ opinions vary on how long prices will fall.
Wholesale gas prices suggest that retail prices will continue to fall for the next two weeks, said Scott Hoyt, senior director of consumer economics at Moody’s Analytics in West Chester, Pennsylvania.
Denton Cinquegrana, chief oil analyst at the Oil Price Information Service in Rockville, Maryland, agreed, adding that he expects the Long Island average price to continue falling through September.
Chris Lafakis, director of energy and climate economics at Moody’s, said he doesn’t expect much change in 2022.
“I expect gasoline prices to remain close to their current levels through the end of the year,” he said.
These projections are based on looking at any major changes in supply and demand.
“Regarding the factors driving up gasoline prices, I look for gasoline consumption,” Hoyt said. “Will it remain seasonally weak like it was in the summer or will it rise? Beyond that, anything that raises the price of oil will raise the price of gas: less flow from Russia to world markets, hurricanes in the Gulf, or some other supply disruption,” he said.
For some Long Islanders, the needle on gas prices hasn’t moved enough.
“It’s more … No matter what, you still have to go to work,” Denise Lewan, 58, said Friday as she filled up her Honda CR-V at an Exxon station in Farmingdale. The Selden resident is still trying to conserve fuel because prices are expected to start rising again soon, she said.
“Now, it’s more like, try to carpool, don’t go to the store if you don’t have to, don’t take any long rides,” she said.
Miguel Espinosa, 25, a salesman at a Lexus dealership in Farmingdale, was refueling an SUV the dealership was selling at Exxon on Friday.
Rising or falling gas prices don’t affect the amount he chooses to drive his own vehicle, the Freeport resident said.
“Gas prices are one of those things that you’re forced to do if you travel somewhere, especially to work, I think…it is what it is. There’s really nothing you can do about it,” said Espinosa, adding that his employer is most affected by rising gas prices because it has to keep fueling the vehicles it sells.
A major factor in the decline in gas prices has been a significant decline in crude oil prices since peaking in June, experts said. Crude oil is refined to make gasoline, diesel and other petroleum products.
After the European Union imposed restrictions on imports of Russian oil in June in response to Ukraine’s February invasion, “there was concern that a lot of Russian oil would not make it to the market,” which helped push up prices. Oil, said Cinquegrana of the Oil Price Information Service.
But the EU’s member states have been slow to implement those sanctions, and China, India and other countries are buying Russian oil at a discount, not in the first place with sanctions, he said.
Russia is the world’s third largest crude oil producer.
According to the US Energy Information Administration, crude accounts for 53.6% of the retail price of gasoline.
The benchmark US crude price was $122 per barrel on June 8. It was $85 on Friday.
Meanwhile, higher gas prices led consumers to cut back on their driving during the summer, which is typically the peak season for car travel.
Moody’s Lafakis says gas demand has decreased by 9 percent compared to last year.
“This has helped take pressure off pump prices,” he said.
Inflation is near a 40-year high and the Federal Reserve is likely to raise interest rates again to try to combat soaring commodity prices — and push the United States into recession, he said.
The Fed, which raised interest rates by 75 basis points in July, is expected to raise them by between 50 and 75 basis points at next week’s meeting, Lafakis said.
“In terms of recession, the concern is not so much… [this week’s] “The hike will take us into recession, but the cumulative effect of interest rate hikes expected to continue next year will do so,” he said.
New York state residents could see statewide gas price hikes — roughly 19 cents more per gallon for Long Islanders — in January as fuel tax breaks expire.
The state motor fuels tax has been rolled back under a “tax holiday” that began June 1 and will remain in effect until December 31 as part of efforts to offset higher gas prices.
16 cents (8 cents excise tax and 8 cents sales tax) are deducted from the state fuel tax of 33.35 cents per gallon. An additional three-fourths of the state sales tax is suspended in the Metropolitan Commuter Transportation District, which includes New York City, Long Island and five other counties in the metro area.
Also, Nassau and Suffolk counties are among 24 counties that have implemented partial fuel tax caps effective June 1.
With the partial tax limits of Nassau and Suffolk counties, the first $3 per gallon of gas is taxed at the 4.25% county sales tax rate, but the remainder is not taxed. At $3.50 a gallon, the county’s savings is about 2 cents per gallon.
Nassau County’s tax deadline expires on December 31st, while Suffolk County’s expires on December 1st.