For drivers in Niagara County and across the country, the past few weeks have brought a familiar frustration: each trip to the pump costs more, and the thought of when relief will finally come seems farther and farther off.
As you’re likely very aware, the impact of the situation in Iran has combined with normal seasonal increases to fuel — pun intended — staggering price increases at the pump. According to AAA’s East Central Gas Price Report, the average cost of a gallon of fuel in the United States has spiked $1.02 since February, including another 24 cents since last week.
The national average sits at $3.95 per gallon as of Tuesday morning with prices slightly lower in New York state at $3.89 a gallon.
We’re sitting at an average of $3.76 a gallon in Niagara County.
Locally, many have grown accustomed to higher fuel rates thanks to the state’s gas tax, which regularly pushes prices up among the nation’s highest.
Crude oil prices play a major role in what drivers pay at the pump, and prices surpassed the $100-per-barrel mark multiple times over the past week. In an effort to stifle the increases, United States officials and their counterparts in other nations announced plans to release millions of barrels of oil from strategic reserves.
The release of reserves was done to stem the tide of the sharp increases.
But what Americans see all the time continued again this time: While the stock market stabiized for a moment, gas prices didn’t decrease as fast or as much as they increased.
In 2022, officials at the Federal Reserve Bank of St. Louis wrote what we all understand, that increased demand and production costs — along with the uncertainty brought on by the recent military action — can lead to sharp increases.
They also noted a “market dynamic” known as “rockets and feathers,” easier to digest than its formal name “asymmetric pass-through.” When there is an increase in the price of crude oil, the price rockets upward. However, as we see every time something such as this latest outbreak, when volatility stablizes — even briefly — prices come down at a much slower rate (the feather), often taking weeks or months to reach previous levels.
Industry experts note that geography also comes into play. Some areas where the retail markets and margins are greater see different types of reactions, the St. Louis Fed notes. “Gasoline prices in California, Texas and Washington react faster to oil price increases than decreases, while gasoline prices in Massachusetts, Minnesota and Ohio react faster to oil price decreases,” the group notes.
Until that imbalance is addressed, drivers will keep feeling the squeeze every time global tensions flare — and likely long after they’ve subsided. Policymakers and industry leaders alike should recognize that transparency and accountability in pricing are just as important as supply. Because for all of us who rely on their cars every day, relief that drifts down slowly — if it comes at all — isn’t relief at all.