Dispensing once and for all with the fiction that there is any such thing as nine-tenths of a penny, it was only a week ago that the Mobil gas station at the foot of the Rhinecliff Bridge sold a gallon of gasoline for an even $3.50.
On that Monday morning, prices for crude oil futures had surged to $119 a barrel, still the peak recorded price since Feb. 28, the day President Trump launched military strikes in Iran.
As of this writing, while the barrel price has dropped back down under $100, the Mobil gas station at the foot of the bridge is selling the most expensive gas in Kingston — $3.80 a gallon, if you pay by credit card.
Two miles up the road, the Speedway is hanging on at $3.50 a gallon, while on Broadway Avenue the BP is hovering at $3.60 a gallon. Cash or credit, you still pay the top price.
All industry experts have reached consensus that the sticker shock in gas prices playing out on the streets of every Ulster County municipality is due to a forced standstill of petroleum shipping traffic in the Strait of Hormuz — an ocean waterway with a natural 23-mile-wide bottleneck, with Iran on one side and Oman and the United Arab Emirates on the other.
(Crude oil products emanating from Saudi Arabia, Kuwait and Qatar all must pass through the bottleneck on their way to international markets.)
But what’s the price of tea in Bahrain got to do with a gallon of gas in Kingston? Even though the United States is a net energy exporter, local gasoline prices still move with the global oil market.
“Twenty percent of the world’s oil goes through the strait,” observes Mark Romaine, chief operating officer for Global Partners, the biggest player in gasoline shipping and distribution on the Hudson River — and the entire Northeast — before adding: “But the reality is, most of that oil doesn’t come [to the United States.]”
Global Partners commands a contracted domestic fleet that ships crude oil between refineries and 30 coastally located bulk storage terminals in the Northeast.
The refined product that commuters in Ulster County purchase comes almost exclusively out of the New York Harbor, where the larger ocean-going vessels arrive to weigh anchor and break bulk before other barges — their size can be anywhere from 25,000 to 150,000 barrels — ship the gasoline up the Hudson River, to be distributed to tanker trucks out of Newburgh and Albany.
“The longer this goes on,” says Romaine, “what will end up happening is that countries or markets that were taking that oil will now have to get their oil somewhere else. Maybe they get it from Europe, so now Europe’s got to go get their barrels somewhere else. Maybe they go to the U.S.”
The current severity of the spikes in pricing, a sign of tremendous volatility, isn’t typical, Romaine says.
“But we’ve seen it before. Very similar to 2022, when Russia invaded Ukraine. We have the playbooks, so to speak … but no hedge is perfect, and these are the most risky days. There’s no question about that.”
Outside the BP gas station and convenience store on Broadway Avenue in Kingston, a tanker truck driver for Patriot Tank Lines sports a white-horseshoe mustache and wears a hoodie against the brisk morning air.
He’s finished connecting the fuel and vapor recovery hoses to the station’s underground storage tank and stands alongside his tanker truck while it fills.
Owing to the relatively smaller size of the in-ground storage tanks, at 8,000 gallons, the driver says he comes back to refill the storage tank every four or five days.
When his 12,000-gallon tanker sounds hollow, he’ll drive it back down to the Newburgh South terminal, Global’s gasoline and distillate facility near the waterfront. In the jargon of haulers, he calls the terminal a “rack.”
“That gas is all in one big 5-million-gallon tank when it comes off the barge,” he says. “And then when you load that gas, it’s also shooting an additive in there.”
Exxon, BP, Chevron, Conoco and Shell — each petroleum company contributes its own blend of gasoline additives to the gasoline it’s selling to brand the gasoline.
“The gas is all the same,” Russell said. “It’s the additives that make it their brand.”
The owners of the convenience store gas stations themselves decide whether to do business in branded or unbranded iterations. Taking on the brand of an established petroleum company provides gasoline purchase perks and the name recognition that comes from robust advertising campaigns. Asked if brands make a difference to him when he goes to fill his own tank, the tanker truck driver laughs.
“Christ no. Whichever is cheapest. It’s like Stewart’s gas, you know? That could be any gas. If Mobil’s cheaper that day, guess what they’re putting in the tank? If Citgo’s cheaper, it’s Citgo. Prices are crazy right now. I don’t know where this is going, but I hope it goes the other way soon.”
In the City of Kingston, down Broadway Avenue where all gas stations are of the branded variety, gas station owners say the price they charge is almost totally out of their hands.
Reflecting the cost of extracting the crude oil, the cost of refining it, the cost of shipping it to and from the refinery and then shipping it to and storing it at a bulk storage facility, to arrive at the actual price floor before the gas station sets out to make a profit, the cost of picking it up and hauling it to the station must be added, along with state and federal taxes, the only price input that doesn’t fluctuate.
Out of every gallon of gas sold in New York, roughly 44 cents of the cost comes from federal and state taxes and fees.
(The federal government adds an excise tax of 18.4 cents on every gallon sold, while the state of New York adds a motor fuel excise tax of 8 cents per gallon, a Petroleum Business Tax, or PBT, of approximately 17.4 cents per gallon, and a 0.05-cent-per-gallon testing fee.)
With respect to fears of price gouging, considering all of the above, unless the station is operating on a remote stretch of road, there isn’t much room left to play with the price. Competition is sure to discourage the practice.
To hear one Mr. Singh tell it, the owner of three gas stations in Kingston, all selling different brands, “whoever says that is talking nonsense. Let’s say [as in] a competition, you go up. Next guy, they won’t go up. Who’s gonna lose? They’re gonna go to the cheapest. You’re gonna lose your customer.”
Chris Cuff, currently a wrencher at Karrze, formerly owner of J & H Tire and Auto Center on Cornell Street, where he sold unbranded gasoline as a sideline, agrees.
“You have to really watch the market. Let’s just say you’re buying it at $4 a gallon, then, today it’s selling for $4.10. You’re all right. But if it goes down tomorrow and you’re selling it for $3.90, you’re upside down.”
According to the National Association of Convenience Stores, rather than gasoline sales, it’s the convenience store element of the business — the smokes and Cokes — that guarantees the profit. Or, in the case of Cuff, his car mechanic business.
“Selling gas is almost more headache than it’s worth,” Cuff says. “Probably you’re losing money on it, but a lot of people I dealt with I would have never dealt with if they didn’t stop to get gas.”
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