The fiscal cliff looms but there is some good news at the pump, at least. Gas prices in the upper Midwest are not expected to see much of an increase this year and should stay well below $4 a gallon, said Patrick DeHaan, a senior petroleum analyst at

With most gas prices in the Twin Cities currently at levels slightly above $3 a gallon, Twin Cities residents are paying about 5 percent less than they were a year ago, when prices averaged $3.21 per gallon. Prices earlier on Monday ranged from $2.89 at Food and Fuel in northeast Minneapolis to $3.39 at Sinclair in Minnetonka, according to

DaHaan expects that gas prices will average around $3.60 per gallon in the Twin Cities in 2013, similar to 2012, where the high was $3.90 and the low about $3.23 until recently.

Minnesota is in one of two regions of the country that sees more volatile prices--the upper Midwest and the West Coast, but generally Ohio, Michigan and especially Indiana see more volatility than Minnesota.

Volatility is often caused by the unexpected, including Hurricane Sandy and refinery issues such as the BP fire in Cherry Point, Wash. in early 2012 and a 2010 pipeline rupture at the Romeoville, Ill. plant that caused price hikes.

Barring the unforeseen, Minnesotans can also see price spikes in March/April and September/October when refineries perform maintenance on the plants that can slow or shut down production.

"Demand is starting to see show noticeable drops, partly because of greater fuel efficiency in our vehicles," DeHaan said. Gas prices might drop even further if not for China's increasing demand slightly offsetting the United States' decreasing demand.

John Ewoldt • 612-673-7633 or