After gas prices soared to new heights, even crossing the $5 mark months ago, fuel costs have gone in the other direction. The question now is, how low will they go, and how long will they stay there?
Gas prices nationwide have been falling daily for three months — 95 consecutive days on Long Island as of Sunday to be exact — due to declining consumer demand and oil prices, growing recession fears, the slow implementation of European sanctions on Russian oil imports, and other factors, fuel industry experts said.
The average price of a gallon of regular gas on Long Island on Sunday was $3.510, 30% lower than the price June 15, when it hit a record high of $5.046, according to AAA. The average price a year earlier was $3.286 per gallon.
Several stations in Suffolk County were charging $3.09 on Sunday, and one in Farmingdale had a cash price of $2.99, according to the Gas Buddy price comparison app.
Experts’ opinions vary on how long prices will keep falling.
The wholesale price of gas suggests that retail prices will continue to fall for the next couple of 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, saying he expects Long Island’s average price to continue to decline through September.
Chris Lafakis, director of energy and climate economics at Moody’s, said he isn’t expecting much more change in 2022.
“I expect gasoline prices to remain near their current levels through the end of the year,” he said.
These projections are based on seeing no major changes in supply and demand.
“As to factors that could raise gasoline prices, I would look for gasoline usage,” Hoyt said.
“Does it stay seasonally weak as it was over the summer or pick up? Beyond that, anything that drives up the price of oil would drive up the price of gas: Less flow from Russia to world markets, hurricanes in the Gulf, or any another supply disruption,” he said.
For some Long Islanders, the needle has not moved enough on gas prices.
“It’s still high … No matter what, you still have to go to work,” Denise Lewan, 58, said Friday while fueling her Honda CR-V at an Exxon station in Farmingdale. The Selden resident is still trying to conserve fuel because she expects prices 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, who is a salesman at a Lexus dealership in Farmingdale, was at the Exxon on Friday fueling an SUV the dealership is selling.
Neither rising nor falling gas prices affect the amount he chooses to drive his own vehicle, the Freeport resident said.
“I feel like gas prices are like one of the things that you are forced to do if you commute somewhere, especially to work… it is what it is. There’s nothing you can really do about it,” said Espinosa, who said his employer was more affected by rising gas prices because it has to keep the vehicles it is selling fueled.
The biggest factor in falling gas prices is the price of crude oil declining significantly since peaking in June, experts said. Crude is refined to make gasoline, diesel and other petroleum products.
After the European Union enacted sanctions on imports of Russian oil in June in response to the country’s February invasion of Ukraine, “the concern was that a lot of Russian oil would not make it to the market,” which helped to drive up the price of oil, said Cinquegrana of the Oil Price Information Service.
But member countries of the EU have been slow to implement those sanctions, and China, India and other countries that weren’t on board with the sanctions in the first place are buying discounted Russian oil, he said.
Russia is the third-largest producer of crude in the world.
The cost of crude is the largest component in the retail price of gasoline, accounting for 53.6%, according to the US Energy Information Administration.
The price of benchmark US crude was $122 per barrel on June 8. It was $85 on Friday.
Meanwhile, high gas prices led consumers to cut back on their driving over the summer, which is typically the peak season for car travel.
Gas demand is 9% lower than it was a year ago, said Lafakis, of Moody’s.
“That has helped to take pressure off pump prices,” he said.
Compounding consumers’ worries are inflation being near a 40-year high and the possibility that the Federal Reserve will raise interest rates again to try to counteract the soaring prices of goods — and push the United States closer to a recession, he said.
The Fed, which hiked interest rates by 75 basis points in July, is expected to raise them between 50 and 75 basis points at its meeting next week, Lafakis said.
“In terms of recession, the concern isn’t so much whether… [this week’s] hike will take us into recession, but more of whether the cumulative effect of interest rate increases that are expected to continue into next year will do so,” he said.
New York state residents could see gas price hikes statewide — roughly 19 cents more per gallon for Long Islanders — in January due to fuel tax breaks expiring.
The state’s motor fuels tax was rolled back under a “tax holiday” that started June 1, as part of efforts to offset high gas prices, and will run through December. 31.
The reduction took 16 cents (8 cents of excise tax and 8 cents of sales tax) off 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.
Also, Nassau and Suffolk counties were among 24 counties that enacted partial fuel tax caps that went into effect June 1.
With Nassau and Suffolk counties’ partial tax caps, the first $3 per gallon of gas is taxed at the 4.25% county sales tax rate, while the remaining amount will not be taxed. At $3.50 a gallon, the county savings are about 2 cents per gallon.
Nassau County’s tax cap will expire Dec. 31, while Suffolk County’s will expire Dec. 1.