Are Gas Prices Finally Going down in Central New York?
Hold onto your wallets! Filling up your car might start to hurt a little less very soon.
No more pain at the pump?
After suffering through daily hikes in gas prices, it appears they have finally peaked in New York. For the first time in five weeks, the average cost of a gallon of regular gas went up by less than a penny from the previous day's average.
While that is still an increase, here's something else to consider. Also for the first time in a while, gas prices didn't jump by 10 cents over the span of a week. In fact, fuel costs only ticked up by two pennies.
But even with that heartening news, we are still grappling with absurdly high prices.
According to AAA, Utica-Rome residents are paying a little less to fill up their tanks than the majority of the state.
Last week, gas prices in the area averaged around $3.92, Today, that price sits at $3.95, which is two cents more than yesterday and three cents more than last Tuesday.
This is bringing hope that we won't see regular gas going for $4 a gallon in Central NY.
As for mid-grade gas, there has been a decline in prices. This time last week, a gallon sold for $4.34. Today, it is $4.33.
Unfortunately, prices accelerated for both premium and diesel, which are respectively $4.79 and $4.57 a gallon. Last week, their respective costs were at $4.69 and $4.54.
As for where residents can fill up their car for a little less, they need to head to the Nassau-Suffolk area, where the average price of a gallon of regular gas rests at $3.85.
Conversely, the highest prices out of all the state's metro areas can be found in Glens Falls, which is averaging $4.04 for a gallon of regular gas.
The other metro areas with higher prices than the Utica-Rome region are the Albany-Schenectady-Troy area, as well as Watertown-Fort Drum and White Plains.
In all, this is still better than what we were paying a year ago. Last year at this time, residents were paying an average of $4.53 a gallon for regular.
It's been a little over a year since New York witnessed its highest recorded average price for gas. On June 14, 2022, the price of regular unleaded gas hit $5.04 a gallon. Those with diesel engines also endured record-high prices back in May 2022, when it cost them $6.54 a gallon.
The big questions are: Now that prices are slowing down, when will they hit reverse?
Why are prices stalling all of a sudden?
Since last month, fuel prices jumped by 20 cents, which is a bargain considering that prices had risen by nearly 30 cents between June and July.
As for what's causing prices to tick upward, experts are now placing the blame on Organization of the Petroleum Exporting Countries, otherwise known as OPEC+.
Crude oil deeply affects the overall cost of gasoline in the United States. With OPEC+ choosing to limit the amount of oil it exports to the global economy, Brent crude has jumped roughly 12 percent since April.
Saudi Arabia slashed production by 1.6 million barrels a day while Russian exports fell to their lowest level since January 4.
On the other hand, the United States is still pumping out its own crude oil production after marking a record-high output in 2022. Still, it won't be enough to offset costs triggered by OPEC+'s limited production due to increased demand from American consumers.
But when will we see relief?
Additionally, gas prices typically peak in August and then hit reverse in the fall. However, analysts like De Haan aren't optimistic we'll see that tradition this year because of continued high demand, reduced output from OPEC+ and a relentlessly hot summer.
Summer heat likely to spell disaster at the pump
Remember last month's article about how the extreme heat could trigger a catastrophic hurricane season? Well, it's now very likely that will happen.
The heatwave did, in fact, create conditions for a more active hurricane season. The National Oceanic and Atmospheric Administration revised their annual hurricane prediction and say we will now face an "above normal" season.
NOAA bolstered the chances of an "above normal" season to 60 percent, versus the 30% prediction they made back in May.
The administration says we will likely see 14 to 21 named storms form in the Atlantic basin this year, which will produce 6 to 11 hurricanes. From that number, it's expected two to five of them will become major.
That puts additional stress oil refineries that operate along the Gulf Coast and any hurricane damage could impact the prices we see at the pump.
We saw how drastically Category 4 hurricanes have on gas prices, with the best examples being Hurricane Ida in 2021 and Hurricane Harvey in 2017.
Both storms slammed the Gulf Coast and battered refineries with heavy rain and flooding. Multiple refineries shut down or limited production to repair the extensive damage, which caused gas prices to skyrocket as much as 25 cents in response.
So with everything going on in 2023, plus the near certainty of a catastrophic hurricane season, it's unlikely we will see gas prices cool down anytime soon.
Will high gas prices trigger a recession?
Gas prices have a relatively strong impact on the economy and any increase also causes the price of transportation to jump. Fuel costs also cause inflation to eke higher, which is not great considering we are suffering through rates we haven't seen in 40 years.
With both food and energy prices on the rise, all eyes are on the Federal Reserve to see if they will usher in more interest rate hikes. Earlier this month, the Fed rose interest rates by a quarter of a percentage point and kept the door open for future hikes.
The next revision is likely to happen in September.
The uncertainty is also bleeding onto Wall Street. The stock market, which serves as an indicator of how people feel about the economy, sees share prices tumble when interest rates are increased.
Since the Fed issued the 11th hike since March 2022, economists are worried investors will become even more reluctant to bid up stock prices, which could set the economy back even more.
The Fed's decision also has an impact on the consumers' bottom line by placing an additional financial burden on borrowers that pay mortgages, car loans or credit cards.
You can read more about the Fed's rate hikes impact on consumers in this article.
Plus, if that wasn't enough, Fitch Ratings recently downgraded the country's debt rating from AAA to AA+, which rattled Wall Street and caused the stock market to slide.
Fitch signaled it believes the country will soon enter a recession.
Tighter credit conditions, weakening business investment, and a slowdown in consumption will push the U.S. economy into a mild recession in 4Q23 and 1Q24, according to Fitch projections.
Essentially, Fitch predicts the nation will enter a recession after October 1, which is when student loan repayments are slated to resume.
As reported in last week's article, student loan repayments are expected to yank $73 billion out of the economy. Economists raised alarm that this could further cripple the economy, which is still reeling from the pandemic, supply chain issues, and high inflation.
In all, economists and analysts would feel more confident in the economy's performance if gas prices were to fall in reverse. Nothing is certain yet because of the multiple, volatile factors currently at play.
Until then, let's hope we won't cough up $5 to pay for a gallon of gas anytime soon.
