Thursday, 24 March 2022 12:35

Primer at The Pump

Primer at The Pump

SARATOGA SPRINGS —There are more than 150,000 fueling stations across America and you can imagine the scene playing out at any one of those pump-stations as much the same. The car pulls up. The driver gets out and gazes up at the sign displaying the cost of a gallon of gas. Driver shakes head in disgust, verbally unmuzzling a volley of irritations at an invisible cast of invented villainous characters that includes everything from profiteering corporations to inept political leaders and greedy oil executives. But it’s not quite so simple.   

The national average for a gallon of gas this week set motorists back about $4.25, with the state average in New York slightly higher at $4.35, according to AAA. The lowest prices – where a gallon of gas could be had for under $4 - is in the central part of the country, where a north-to-south line extends from Minnesota and North Dakota to Oklahoma and Texas. The highest costs, at over $5 per gallon, are in the westernmost states of Nevada and California. 

Earlier this month the organization noted it was seeing numbers not viewed at the pump since the financial crisis in 2008, the highest on record, and pointed to the steady climb since the start of the calendar year due to strained supply, increased demand, and a spike in oil prices following Russia’s invasion of Ukraine.

Nearly all of the gasoline sold in the U.S. is produced domestically, however. So, why the spike? 

“People have to realize: it goes up, it goes down. It’s a commodity. That’s what it does. What’s taking place right now is fear. There was a lot of fear with Russia going into Ukraine. It spiked,” says local resident Jim Eliopulos, who has been in the oil and gas industry for over 30 years. In 1989, he founded Alexander Production Company in Saratoga Springs, transitioned out of operations in 2018 and currently deals with leasing rights to companies drilling the Marcellus wells. 

“Coming out of the pandemic, demand started to increase. We were in a very good place because people were able to see their freedom: flying, driving, shopping, whatever it is – they were more active with their form of transportation. The production side was still lagging and what people don’t understand is, you hear it all the time - that oil and gas is having a labor shortage,” Eliopulos says.  “I do want to say that the oil and gas industry is not withholding any of their gains in oil and gas to pummel the public.”

“Now when Russia invaded Ukraine, if anyone was paying attention to oil prices, it was nuts. That was nothing more than fear-based. There is always fear when things like this take place,” he says. “On the opposite side of it, in 2020 when things were shut down and people were closed-in purposefully, it was going the opposite way. Gasoline per-gallon was way, way down. I don’t think I have ever seen oil go as low as it did during that period of time.” 

Prices at the gas pump historically follow the global cost of crude oil - which is influenced by expectations of consumer demand, supply, world events, and other factors. The cost of crude oil is the largest component of the retail price of gasoline. And U.S. Crude Oil first purchase price has fluctuated wildly. 

One barrel of crude oil is 42 gallons. It is a measurement adopted as a standard that dates to late 19th petroleum producers of Pennsylvania, the world’s then-center of petroleum production. One barrel of crude oil produces 19 to 20 gallons of motor gasoline, and approximately 9 gallons of diesel and home heating oil. The remaining oil is used to make plastics and other products. 

A monthly analysis dating back several decades indicates the 1980s hit a high cost of about $34 per barrel in the spring of 1981 and a cost low of under $10 in the summer of 1986. During the next decade, a per-barrel cost topped $30 in 1990, and dipped to below $9 in 1999. 

In the current century, the cost per barrel hit the $100 mark during several months in 2008, and again in 2013, whereas the lowest costs in each decade, at under $20, were in October 2001 – Feb. 2002 (the months immediately following 9/11), and in April-May 2020 (the early days of the pandemic), according to the U.S. Energy Information Administration.    

Specifically at the pump meanwhile, the cost of gas first climbed over 50 cents per gallon in the mid-1970s, broke the $1 per gallon barrier in 1980, and the $2 mark in 2005, according to a 2018 USA Today study “What A Gallon of Gas Cost the Year You Were Born,” which tracks the annual average price per gallon from 1929 to 2016.

The varying cost at the pump from one state to another is also affected by the amount of taxes each state applies. Nearly all states levy taxes or other fees on gasoline sales, which goes on top of the federal gas tax of 18.4 cents a gallon. In its July 2021 report, the American Petroleum Institute reported that New York was the ninth highest in the country in total state taxes on gasoline.    

With costs spiking earlier this month, lawmakers in Georgia and in Maryland announced measures to temporarily halt their respective state gas taxes. A number of other states, including New York, are currently debating whether to follow suit. 

To save money, there are methods drivers could employ to be less wasteful in their use of gas. Common-sense suggestions aside (avoid unnecessary trips, carpool, run multiple errands in one trip), it helps to ensure that tires are properly inflated, that vehicles don’t idle unnecessarily, and to adopt good driving habits. To the latter point, aggressive driving – speeding, rapidly accelerating and braking – can lower your gas mileage by 33 percent at highway speeds and by 5 percent when driving around town, according to a list of Gas-Saving Tips released by the U.S. Department of Energy.   

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