Why gas prices are at their highest in years and what that means for New York drivers

Gas prices across the country are at the highest levels since 2014, according to AAA and GasBuddy. 

In New York, drivers are paying about $1 more per gallon compared to this time last year. The costs are linked to the COVID-19 pandemic, global oil production and increasing demand, according to experts. 

Here's what else you need to know.

Why are gas prices going up?

Both the growing cost of crude oil and a recent decision from the Organization of the Petroleum Exporting Countries (OPEC), Russia and other allies are playing a role in higher prices, according to AAA. 

It's out of the norm for this time of year, Patrick De Haan, head of petroleum analysis at GasBuddy, explained. Usually gas prices decline slightly in the fall, he said, but this year, the pandemic is continuing to have long-term effects on consumers.

"There's been a lot of imbalances created by COVID," De Haan said. "And this is simply one of them."

When COVID-19 first hit in 2020, the drop in gas demand caused a drop in prices, he explained. As a result, oil companies started to flatten production and implement mass layoffs.

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Fast forward about a year later, with the arrival of the vaccines and a return to travel, and De Haan said they started to see consumer confidence and gas demand go back up.

Now, "demand for gasoline since then has reached near-normal levels," De Haan said. "It's still slightly below — and I think a lot of that is because people are still working from home — but we're still in the midst of the pandemic." 

Though demand is "nearly normal" again, oil production is "lagging severely behind" De Haan said.

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"Part of the reason is because the depth of the crisis last year," De Haan said. "Oil companies let millions of people go. Not only did U.S. oil producers slow production down, but OPEC did as well. And since then, they've been slow to increase production again." 

In talks last week, OPEC+ discussed the issue of increasing global oil production. The group decided to continue their "gradual approach" to restoring production, according to the Associated Press, adding 400,000 barrels per day in November. A previous agreement, which was not implemented, would have produced about 800,000 barrels per day, according to AAA.

What does that mean for New York drivers?

The average price of gas in New York is $3.424, according to AAA, close to the national average of $3.319. 

Average gas prices across region as of Oct. 17

• Allegany County $3.378
• Broome County $3.411
• Chemung County $3.407
• Dutchess County $3.424
• Herkimer County $3.453 
• Monroe County $3.406
• Oneida County $3.431
• Ontario County $3.422
• Orange County  $3.376
• Rockland County $3.511
• Steuben County $3.420
• Tompkins County $3.432
• Ulster County $3.367
• Westchester County $3.563  

This week, New York had one of the country's top 20 largest weekly jumps, according to AAA, with statewide gas prices going up by about 8 cents. This week's average price is up by more than $1 compared to this time last year.

In addition to the rising national trend, New York consumers might see prices vary based on "price cycling," De Haan said. It's when one gas station might raise prices by about $0.20 - $0.40 causing other local gas stations to follow suit. After several stations have raised their prices, that first station might drop prices by about a penny each day, leading to a chain reaction in the opposite direction.

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"They keep undercutting each other, a penny or two every day,"  De Haan said. "Until the station is losing money, and that's when the station then will hike prices back up. And then the price war is happening all over again.

"Price cycling basically means that prices shoot up every seven to 12 days on average. But it also means that right after prices go up, they start to come down as well."

What's next?

"There's so many COVID-related bottlenecks that develop relatively quickly," De Haan said. "That it's just really impossible to know what could happen tomorrow."

He encourages drivers to shop around on their next trip to fill up the tank.

"There's some stations that are you know closer to $3.09 and there's some that are $3.39," De Haan said. "So those sorts of price discrepancies always provide an opportunity for motorists to spend a little bit less."

Contact Rashika Jaipuriar at rjaipuriar@gannett.com and follow her on Twitter @rashikajpr.