Seesawing gasoline prices are on the upswing in Minnesota

  • Article by: DAVID SHAFFER , Star Tribune
  • Updated: December 30, 2013 - 8:03 PM

Minnesotans are driving more, and the price of light crude is up.

Minnesota’s less-pain­ful gaso­line prices have ev­apo­rat­ed.

Motor­ists had been pay­ing less than $3 per gal­lon at the pump through much of De­cem­ber, in­clud­ing a 2013 state-re­cord av­er­age low of $2.92 a few days be­fore Christ­mas.

But it didn’t last. The state­wide av­er­age price of regu­lar gaso­line rose 24 cents to $3.16 per gal­lon over the past 12 days, ac­cord­ing to AAA data.

“That is a very dra­mat­ic price hike, and it is not some­thing that driv­ers in Minnesota see very of­ten,” said Michael Green of AAA’s Daily Fuel Gauge Report, which tracks gaso­line prices based on cred­it-card swipes.

Green said prices have stabilized in the past cou­ple of days. A hol­i­day-sea­son price jump also hap­pened last year — only to be fol­lowed by sig­nif­i­cant­ly low­er prices in Jan­u­ar­y.

It’s been a year of seesaw gas prices. Minnesota is one of two states where gas prices in 2013 at one point ex­ceed­ed $4 per gal­lon — back in May — while drip­ping be­low $3 at oth­er points, said Tom Kloza, chief oil an­a­lyst with ­GasBuddy.com.

Sev­er­al fac­tors may ex­plain the lat­est up­tick, ana­lysts said.

Peo­ple are driv­ing more, boost­ing gaso­line de­mand. The price of light crude oil also is up this month to $99 per bar­rel. Some Midwest re­fin­eries are not op­er­at­ing at peak, and the St. Paul Park re­fin­er­y, the small­er of two re­fin­eries in Minnesota, could face a strike Tues­day if ne­go­tia­tions with the un­ion rep­re­sent­ing near­ly 200 op­era­tors reach an im­passe.

Even with the lat­est in­crease, Min­ne­so­tans still paid less than motor­ists in 32 states, with Con­nec­ti­cut driv­ers pay­ing $3.70 per gal­lon, the high­est av­er­age price in the Lower 48 states, AAA data showed. Mon­tan­a had the low­est ­av­er­age price on Mon­day, $3.01 per gal­lon.

What’s going up?

Driving and fuel de­mand are up. AAA, which also tracks hol­i­day trav­el, pro­ject­ed that 85.8 mil­lion Ameri­cans — or one in four — are tak­ing road trips be­tween Dec. 21 and Jan. 1. It is the fifth con­sec­u­tive annu­al in­crease, and the high­est trav­el vol­ume ever pro­ject­ed by the mem­ber­ship trav­el serv­ice.

U.S. fuel con­sump­tion in­creased in No­vem­ber to the high­est level for that month in six years, with gaso­line up 5.4 percent, the American Petroleum Institute re­port­ed last week.

“The num­bers have been pret­ty spec­tac­u­lar,” Kloza of GasBuddy.com said of the late-year spike in de­mand.

But he add­ed that “gaso­line de­mand is very, very lumpy” and it could fall off in Jan­u­ar­y as low tem­pera­tures and win­ter weath­er keep driv­ers at home. That tends to bring prices down, as hap­pened last Jan­u­ar­y when Minnesotans were paying less than $3 per gallon.

Look­ing a­head, Kloza said, many com­mod­i­ty fu­tures trad­ers seem to be bet­ting on high­er pe­tro­le­um prices.

“We are going to end 2013 with the great­est a­mount of fi­nan­cial mon­ey in­vest­ed in the long side of crude,” he said. “There is lot of mon­ey that has pumped up the price.”

Alex Breitinger, a com­modi­ties fu­tures bro­ker with ­Par­a­gon In­vest­ments in Valparaiso, Ind., said re­fin­er­y shut­downs in the North­east and in­ter­na­tion­al fac­tors are af­fect­ing the world oil market.

The mar­ket had an­tic­i­pated a sig­nifi­cant flow of oil from Iran amid op­ti­mism that an ac­cord over its nu­clear weapons program would ease trade sanc­tions, he said. “That didn’t hap­pen,” Breitinger said, so trad­ers stopped bet­ting on a peace dis­count.

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