Niagara Gazette

March 25, 2013

PAIN AT THE PUMP

By Macintosh Barker
Niagara Gazette

Niagara Gazette — If you ask someone about the price of a head of lettuce, a gallon of milk or a block of cheese, you'll likely be met with a blank stare. If you ask someone about the price of gas, however, you're sure to get an opinion on costs that seem to only be going up.

A gallon of gas now costs between $3.84 and $4.08 in Western New York, with prices changing daily. Conversely, the national average for a gallon of gas is $3.67. 

So why are prices higher here?

Local experts say New York's tax structure has a lot to do with it. 

"When you look at New York state as a whole, taxes are the big reason," explains Steve Pacer, a public affairs specialist for AAA of Western and Central New York. "Only an handful of states have sales tax on top of (federal) gasoline tax."

Indeed, New York's combined state, federal, and local taxes add up to 69.7 cents per gallon, the highest in the nation. That's why travelers often see lower prices in the neighboring states of Pennsylvania or New Jersey. Combined with tensions in the oil-rich Middle East, severe weather and problems at U.S. refineries, it can be a big headache for the traveling public--and they're not the only ones.

"We don't like to see high gas prices either," said Dale Wittlief, Vice President of Fuel and Purchasing for Delta Sonic. Wittlief says that credit card companies charge interchange fees and can even make more money per gallon than the gas station itself. For that reason, some gas stations charge less if you pay with cash or a debit card. "It does help us when customers do use cash, it allows us to be competitive," he says.

Though the price of fuel is high now, Pacer is confident that it will start falling soon. 

"We're expecting things to peak in early April, barring anything unforeseen," he said.

The increasing cost of fuel also doesn't mean people are driving less, according to AAA's research.

"We don't see a lot of travelers not traveling, we see them cutting back in other areas of their lives," said Pacer.

As for motorists, AAA has some advice for those looking to save at the pump. 

"A lot of people tend to drive around and look for the cheapest price, we don't recommend that," Pacer said. 

He also suggested combining errands into one trip, and making sure that a car's tires are properly inflated, which increases fuel economy by an average of 3.3 percent.

The Associated Press reported earlier this month that the price at the pump has remained relatively steady even despite an increase in U.S. oil production and lower consumption of gas among American drivers. 

U.S. oil output rose 14 percent to 6.5 million barrels per day last year — a record increase. By 2020, the nation is forecast to overtake Saudi Arabia as the world's largest crude oil producer. At the same time, U.S. gasoline demand has fallen to 8.7 million barrels a day, its lowest level since 2001, as people switch to more fuel-efficient cars.

U.S. drivers are competing with drivers worldwide for every gallon of gasoline. As the developing economies of Asia and Latin America expand, their energy consumption is rising, which puts pressure on fuel supplies and prices everywhere else.

The U.S. still consumes more oil than any other country, but demand is weak and imports are falling. That leaves China, which overtook the U.S. late last year as the world's largest oil importer, as the single biggest influence on global demand for fuels. China's consumption has risen 28 percent in five years, to 10.2 million barrels per day last year.