An oversupply of crude in the midsection of the U.S. has sent gas prices below $3 a gallon here, but they're unlikely to stay there.
Minnesota motorists are paying the lowest retail gasoline prices of the year as they fill up for the long holiday weekend, but those prices might not last.
Some stations in the Twin Cities dropped prices in the past week to $2.99 per gallon or less.
But Patrick DeHaan, a senior petroleum analyst for the gas-price tracking service GasBuddy.com, said the average price at metropolitan stations is trending up again.
"I believe the Twin Cities average will pop up above $3 a gallon," he said Wednesday.
DeHaan said gas prices tend to be lowest between the Thanksgiving and Christmas holidays as demand for fuel drops from the summertime peak. Gasoline inventories have been on the rise but dropped slightly in the latest government report.
AAA said Wednesday that Minnesota's statewide average pump price stood at $3.03 per gallon, with Twin Cities prices averaging nearly 5 cents less than that. Prices in the state are the fifth-lowest in the U.S. and the lowest in the Twin Cities in two years, said Michael Green, AAA spokesman.
"Drivers in Minnesota have almost reached the psychologically important $3 per gallon point," Green said. "Most people feel a little more comfortable filling up the tank."
One in four Americans is expected to hit the road for the holidays -- about 84.4 million people, up 1.3 percent over last year, Green said.
Midwestern states are seeing the lowest gas prices, fueled by an oversupply of crude oil in the midcontinent, benefiting refineries in the region, including those in the Twin Cities.
Crude oil prices rose Wednesday, with two benchmark prices up for a January futures contract.
The fiscal cliff negotiations in Washington, D.C., may affect oil pricing. Green said failure to reach an agreement on the nation's taxes, spending and deficits could provoke pessimism about the economy, which could translate into less consumer spending that could lower crude oil and gas prices.
"If it turns out that Congress and the president can come to a deal and prevent the fiscal cliff, there is some expectation that gas prices will rise because people will be expecting a stronger economy," he added.
Futures contracts for oil suggest that early 2013 might not see the wide swings in crude prices that occurred last year, according to the U.S. Energy Information Administration. Last year at this time, a volatility measure for crude futures was significantly higher, the agency said.
David Shaffer • 612-673-7090
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