Minnesota feels less pain at the pumpGas prices have dropped below or near $3 per gallon after peaking at $4.28 in May.
By: John Myers, Duluth News Tribune
Minnesota’s average gas price today dipped to $3 per gallon for the first time in nearly a year as cheaper crude oil and strong refinery production merge with declining demand by drivers.
Minnesotagasprices.com listed the statewide average for self-service, unleaded regular gasoline at $3. In Duluth, prices this morning ranged from $3.03 to $3.09 per gallon.
Statewide, prices ranged as low as $2.82 in Coon Rapids to $3.19 in Warroad and Edina.
That’s down from the $4.28 per gallon it cost in May when global crude oil prices were higher and at least one Minnesota refinery had slowed production.
For a 350-mile roundtrip from Duluth to the Twin Cities and back in a vehicle that gets 25 miles per gallon, the difference amounts to about $18 in savings compared to May.
It’s the lowest price in Minnesota since gas was $2.94 per gallon in early January.
Experts say that the $3 per gallon ballpark could be the new normal, at least into early 2014, with crude oil production up. Monthly estimated domestic crude oil output averaged 7.7 million barrels per day in October, which was the highest production for any October in 25 years, while oil imports were 7.6 million barrels per day, according to the U.S. Energy Information Administration.
In October, as predicted by the EIA, the U.S. produced more crude oil than it imported for the first month since early 1995.
The federal agency “expects that falling crude oil prices and a well-supplied gasoline market will help drive U.S. retail gasoline prices down further for the remainder of the year, falling to a monthly average of $3.17 per gallon in December,” down from $3.19 this week, the agency reported.
Retail gasoline prices aren’t expected to drop much lower with crude oil prices leveling off. After 15 weeks above $100 per gallon, the price of West Texas Crude dropped back to under $94 for the past couple of weeks and appears to have stabilized at that level.
“I still believe that prices in Minnesota will average in the low $3s for the rest of the year,” Patrick DeHaan, gas industry analyst for gasbuddy.com, which operates minnesotagasprices.com, said. DeHaan said some refineries are cutting back slightly on production and that he thinks $3 per gallon is about as low as gas will get in Minnesota. “If not $3, very close — I don’t see it getting much better.”
Another reason gas prices are dropping is that Americans drive less in the winter. But residents aren’t driving as much as they used to in any season. The number of per-capita miles driven in the U.S. peaked in 2005 and started to drop before the recession ate into people’s travel kitty. Increasingly higher-mileage vehicles also help reduce demand for fuel.
Prices have been below $3 for a couple weeks in Hibbing and several Twin Cities suburbs where competition, or so-called gas wars, have taken place.
Gasoline is at one of its lowest prices in years. Per gallon, gas was $2.79 in November 2010, $2.45 in January 2010 and $1.56 in November 2008.