Hear that sigh of relief? It’s from drivers who’ve been able to buy gasoline for under $4 a gallon.
Officially, the average price for a gallon of regular unleaded gas on Thursday was $4.10 in New Jersey, crawling down from $4.17 a week ago and $4.24 a month ago, GasBuddy.com reported. By comparison, the national average price was $4.14 a gallon Thursday, down from $4.22 a week ago and $4.15 a month ago according to GasBuddy.
But savvy drivers can pay less by shopping around. GasBuddy lists 15 stations where prices ranged from $3.68 to $3.81 and others aren’t hard to find.
Are we reaping the benefits from President Biden ordering the release of crude oil from the nation’s strategic reserves for the next six months?
Not yet, said Tom Kloza, global petroleum analyst for the Oil Price Information Service.
The benefits of Strategic Oil Reserve gas won’t be felt at the pump until May 1, he said. But the additional oil being released is having an effect in the commodities marketplace.
“The drop in crude oil prices is in anticipation of more barrels coming from the U.S. reserves,” he said.
Crude oil priced on Commodities markets dropped to $95.60 per barrel on Thursday, down from a high of $103.28 on Monday, according to NASDAQ.
What has tapped the brakes on gas prices so far is a lack of demand in New Jersey.
“The U.S. government believes driving season starts on April 1st, but there is nothing special about April in New Jersey,” Kloza said. “We’ve seen (gasoline) demand lag behind 2019 by 15 percent.”
Gas prices in New Jersey have dropped in recent weeks, but not because of the release of oil from the U.S. strategic reserves, experts say. Aristide Economopoulos | NJ Advance Media
Summer blend could push prices back up
Experts say the relief we’re seeing now could start fading as soon as April 15, when summer blend gasoline starts replacing winter gas in gas station tanks.
“Those (summer) blends are more difficult to refine and complicated to distribute, increasing the price,” said Robert Sinclair, a AAA Northeast spokesman. “Winter blends must be flushed from the system, leading to sale prices on the flushed fuel,” which is what we’re seeing now.
There is a caveat: Winter gas that’s already in the system can be sold until June 1, which in some locations could stall a price increase of up to 20 cents per gallon that summer blend gas usually brings, Kloza said.
But that increase — along with higher demand for gas as the summer driving season starts in New Jersey, and any unforeseen disruptions to the gas supply — could make prices “sizzle” this summer, he said.
“Warming weather leads to more folks heading out to shake off the Covid doldrums, leading to more driving and more demand for gasoline,” Sinclair said. “That leads to higher prices. Memorial Day is the start of the summer driving season, more demand and definitely higher prices.”
How can the release of those millions of barrels from strategic oil reserves offset the higher cost of summer gas? Expect a price reduction of about 18 cents to 35 cents per gallon, Kloza said.
“Enjoy it while you can, because the odds are stacked for a sizzling summer of prices again,” he said. “There will be diversity in prices, people will line up at Costco” and other discount gas retailers.
Drivers aren't the only ones feeling the pain of high gasoline prices. Airlines are facing big spikes in jet fuel costs and passing some of those costs to passengers in the form of higher ticket prices. ASSOCIATED PRESS
Jet fuel prices soaring
While Kloza doesn’t see gas prices deterring Jersey drivers from making their seasonal pilgrimages to the Shore, other vacationers who fly to their destinations may feel a bite from fare increases to cover rising jet fuel prices so high that they have the same numbers as Boeing airliner model numbers.
New York harbor prices for jet fuel hit $7.27 a gallon Thursday, down slightly from previous highs of $7.47 and $7. 57 respectively, he said. That is up from $3.63 a gallon two weeks ago.
“It’s like the wet Dreamliner for someone selling jet fuel… It’s fares out of the Northeast, from Philly to Boston that will go crazy,” Kloza said. “A Boeing 737 uses 750 gallons of fuel an hour.”
That type of price spike is a cautionary tale for what could happen to gas and diesel prices, Kloza said.
“That can happen to gas or diesel prices against the backdrop of what’s happening in the world,” he said. “It could be a dress rehearsal.”
There will be no margin for error this summer, if there is a problem or incident, such as a hurricane that disrupts supplies from Gulf Coast refiners, since past supplies of gas that could be imported from Europe to the East Coast won’ be available, Kloza said.
“If there is an issue at Bayway refinery or the Delaware River refineries, prices could go high quickly,” he said.
During a press conference earlier this week, experts from the American Fuel & Petrochemical Manufacturers said refinery utilization is at 90% range and pipelines, such as the Colonial Pipeline to the Northeast, also are at or near capacity.
“The East Coast has less refining capacity to meet local demand and it s hard for them to compete because of the higher cost of transportation,” said Susan Grissom, chief industry analyst for American Fuel & Petrochemical Manufacturers.
Grisson and John Auers, an executive vice president for Turner Mason analysts, criticized the release of crude oil from the strategic reserves, calling it a Band-Aid solution.
“That is a short-term impact (on prices),” Auers said. “Policies to incentivize sustainable increase in crude oil production would be more impactful than Band-Aids.”
The other wildcard is crude oil production decisions by OPEC Plus, which was expanded in 2016 to add 10 oil producing and exporting countries, including Russia, Kloza said.
“More than anything up until Putin (invading Ukraine), the reason we saw prices ascend was the formation of OPEC Plus, which was the OPEC countries, plus Russia,” Kloza said. “We want to blame a president instead of blaming these rogue countries that basically have us by the short hairs, demand aside.”
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Larry Higgs may be reached at lhiggs@njadvancemedia.com.
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Gas prices are dipping, even though strategic reserve oil hasn’t hit the streets yet. Here’s why. - NJ.com
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