Minnesota gas prices bust through $4 level

The price of a gallon of gasoline hit a shocking level overnight. In the Twin Cities, several chain gas stations — mostly in the outer ring — raised their prices to between $4.09 and $4.19 a gallon. That’s about 20 cents more overnight, 60 cents in the last two weeks, and $1.20 since January. At many stations, prices rose into the $4 range yesterday afternoon, then fell overnight into the $3.90 area.

What’s going on here?

“As we head into Memorial Day, drivers are experiencing the lowest gasoline prices since 2008,” CNBC says today, while noting that demand is relatively low and supplies are abundant.

Meanwhile, the Labor Department issued its wholesale price for April, pointing to low energy prices.

The Labor Department said that the bulk of the decline was driven by energy prices, which fell 2.5% on the month. These prices have been falling around the world among as the result of weakening demand and of indications that fast- rising U.S. oil production will greatly boost global supply in the coming years.

The decline in energy prices, in turn, was led by gasoline prices, which fell 6% in April. The U.S. Energy Information Administration has forecast demand for gasoline in the spring-summer driving season will fall to a 12-year low as the result of high unemployment, changes in driving habits and improvements in vehicle fuel efficiency.

The EIA, the government oil monitor, also proclaims good news:

Falling crude oil prices contributed to a decline in the U.S. regular gasoline retail price from a year-to-date high of $3.78 per gallon on February 25 to $3.52 per gallon on April 29. EIA expects the regular gasoline price will average $3.53 per gallon over the summer (April through September), down $0.10 per gallon from last month’s STEO. The annual average regular gasoline retail price is projected to decline from $3.63 per gallon in 2012 to $3.50 per gallon in 2013 and to $3.39 per gallon in 2014. Energy price forecasts are highly uncertain, and the current values of futures and options contracts suggest that prices could differ significantly from the projected levels.

Usually, there is a relationship between the price of oil in the U.S., and the price of a gallon of gasoline. In the last few weeks, that has not been the case.

Minnesota Historical Gas Price Charts Provided by GasBuddy.com

  • David G

    oops, guess I should have filed up last night like I had planned. It was $3.83 in New Brighton.

    Didn’t I read recently that part of the Flinthills refinery is down for maintenance, and that was putting upward pressure on local prices?

  • David

    We all know that there isn’t price fixing going on in the USA, but others aren’t so sure.

    Of course, if there is price fixing happening with companies like BP outside of the USA I’m sure they employ a totally different style of business while within our borders. Our politicians have investigated.

  • Robert Moffitt

    If these higher prices last, we will likely see spikes in bus and train ridership rates. That’s what has happened before when the price at the pump gets painful.

    It also is a boom for E85, which is almost always priced cheaper that regular unleaded. There are roughly a quarter million flex fuel vehicles that can use E85 (or gasoline) registered in Minnesota.

    As for me, I’m glad I “went small” with my personal vehicle some years ago. I replaced a fuel-sipping VW with a gently-used Honda Fit that goes even further on a gallon of gas.

  • Joe

    Love to see the oil companies profit numbers added alongside the other data in this graph…

  • John O.

    I *knew* Moffitt had something to do with this! The price spikes and volatility were a large part of the reason why we have shifted to vehicles that run on diesel (TDi engines).

  • jon

    Glad I filled up yesterday!

    Now I just need to get everything squared away so I can start taking the motorcycle to work.

  • Robert Moffitt

    We like the new cleaner diesels, too, John O, especially the ones that are B20-ready.

    We have a VW Beatle TDI on display right now in the Minneapolis Convention Center. It’s part of our exhibit for the Minnesota Safety & Health Conference. Our E85-powered F-150 is there, too.

    A good time to talk to people about the alternatives available.

  • Marshall Skare

    The question of why the gas price has spiked isn’t answered yet. What’s going on here?

  • Bob Collins

    We used to have a NewsCut reader — and maybe we still do — who worked at one of the local refineries and was responsible, I think, for monitoring prices. Then I met him at the State Fair last year and put his email close by and now I can find it.

    i was hoping he’d stop in today but in the past he has affirmed that it’s all supply and demand and nothing more.

  • Joe

    So why is the price in the states surrounding Minnesota 70 cents a gallon cheaper? Its lower in Chicago! When was the last time that happened?

  • Kassie

    I use one tank of gas every two weeks, less in the summer. For me, $3.50 or $4.50 a gallon doesn’t make much difference. There are far more enjoyable ways to get around than driving and I made the decision to live where I can get everything I need by walking, including getting to work. People chose to drive. They chose to pay the prices the market sets. And, I guess, they choose to complain about it.

  • Tim

    Kassie, while I do see your point to a degree, it’s not quite that simple in today’s housing and job markets. There are many people who are stuck in place, so to speak, and can’t just move to a closer home or find a job that’s better located even though they may well want to. While I hope this would lead people to think about these things more in the future and plan accordingly, it’s not something most people can change overnight.

  • Sue

    Wow–I saw new prices and a flag at half-staff after a day at work (offline) and was expecting to hear that Armageddon was upon us. Turns out it’s Police Officers’ Memorial Day; just a coincidence!

  • Bob Collins

    As smug as people tend to get about the choices they’ve made, the price of gasoline is far, far more wide-reaching than what it costs you to put gas in your car.

    The food, for example, that you eat didn’t get to the store by light rail, bus, or on bike.

    Like it or not, the economy rises and falls with energy prices. And people can’t choose whether to eat or afford the things they need, even if they can walk to get to the store.

  • John O.

    Excellent point, Bob. The bulk of that food is transported by trucks that use diesel. One of the main reasons we switched to diesel is that the price remains comparatively stable to that of regular gasoline. The only real time that diesel prices fluctuate significantly is when the refineries are transitioning from winter blend to summer blend diesel.

  • Dan Bird

    Some people work two jobs and still have trouble with gas prices. My car gets 32 mpg but that dosen’t help when you drive 52 miles round trip to work. And I’m not gonna move because my house was built new 8 years ago. Plus my daughter has one year of school left .

  • C.Dorr

    This problem has not gone unnoticed by our US Senators.

    Yesterday Sen. Klobuchar sent a letter to the Secretary of Energy demanding to know why MN was the high price locale & why the refineries shutdown were timed together. Her letter explained how tourism is a large business in MN & how higher gas prices would force people to cut back on their summer travel & thus impact the local economies. More of her efforts on high gas prices can be found on her official Senate website http://www.klobuchar.senate.gov/mediacenter.cfm and put in the search box “gas prices”. Kudos to Sen Klobuchar for speaking up for us & demanding answers.

    Sen. Franken issued a press statement which criticized the high prices. But nothing more.

    It’s good to know that some of our elected officials in Washington are on top of this & advocating on our behalf.

  • Colin

    Dan Bird,

    At the risk of being insensitive, who forced you to live 52 miles from work? You built a new home in the middle of the foreclosure crisis and chose to build it nearly 2 hours from work (more in the winter). Even with your efficient car you’re using over 3 gallons of gas every day you go to work. This recent price spike may be the result of refinery closures but our overall high gas prices are the result of people like you who chose a lifestyle where you’re using over 16 gallons per week just to get to work, not to mention any personal driving and what your wife and daughter use.

    On a more personal note. When do you ever get to see your family if you’re spending 20 hours/week commuting to one of your 2 jobs? Maybe if you weren’t wasting so much money on your commute you wouldn’t need the second job. Or, if you weren’t wasting so much time on your commute you could spend more time at your second job. Either way, you’ll have to forgive me for my lack of sympathy at the entirely predictable results of your choices.

    Whenever people feel like complaining about gas prices they should really look to the suburbs, and especially the exurbs, where people like Dan guarantee long term high prices.

  • Bob Collins

    OTOH, you can buy an awfully lot of gasoline for the money you save in property taxes not living in the cities.