Twin Cities gas prices dipped to a reported low of $2.91 per gallon Tuesday. But nowhere did the plunge at the pump fuel more questions -- and smiles -- than in Anoka County, home of 13 of the 19 lowest gas prices reported in the metro area.
Anoka County gas prices, consistently 20 to 35 cents per gallon less than many Twin Cities stations for several months, dipped below the $3 mark last weekend. "It's the pricing strategy and competition in Anoka County that drives down the prices," said Jason Toews, co-founder of the TwinCitiesGasPrices.com website.
Minnesota law forbids individual stations from pricing gas for less than a minimum markup of 8 cents above their cost. But when Anoka Sinclair station manager Mahmoud Salaymeh contemplated Tuesday morning's gas prices, he said he walked down the street, "checked my competition and made sure I was 1 cent lower."
He settled at $2.95 per gallon -- as did at least 11 Anoka County stations. Two stations west of Minneapolis -- SuperAmerica in St. Michael and Sunoco in Albertville -- had reported metro-low prices of $2.91. But the next six lowest prices -- two at $2.93 and four at $2.94 -- were in Anoka County.
As Anoka native Garrison Keillor might say, in Anoka County, all the women are strong, all the men are good looking and all the gas prices are below average.
Attracting customers may have a greater value to Anoka County station owners than gasoline profits, said Ron Planting, an economist with American Petroleum Institute in Washington, D.C.
"Many managers around the country believe that if people keep stopping for gas, they'll buy other products," he said.
One obvious example is Costco in Coon Rapids, which was selling gas for $2.94 per gallon, with the hope of enticing customers to buy other products.
Arrangements with suppliers vary station to station, with long-term deals often meaning cut rates, Planting said.
But prices can be cut only so low. At 8 a.m. Tuesday, the actual cost of gasoline to SuperAmerica retailers was $2.1026, said Linda Casey, spokesperson for Ohio-based SuperAmerica. Another 65 cents per gallon for shipping brought the cost to $2.75. Then come the additives -- oxygenates such as 10 to 15 percent ethanol blend used in regular unleaded gas, she said.
"In some states, stations actually lose money at the pump when they cut prices," she said. In a state like Minnesota, with its price-cutting minimum, there's not much margin for lowering prices.
How low can they go? Compare some Anoka station prices to other metro stations, where gas peaked at $3.68 -- 75 cents a gallon more than the lowest Anoka County station, according to TwinCitiesGasPrices.com, which relies on consumers' reports. According to the website, the highest gas prices Tuesday were $3.68 at Southview 66 in South St. Paul and $3.58 at a Woodbury Sinclair station.
"There's no obvious explanation," said AAA-Minneapolis spokeswoman Dawn Duffy of Anoka County's low prices. She wondered if it had something to do with the number of stations clustered together on corners.
"Somebody once told me that Edina has the fewest gas stations per square mile, and you don't see a lot of low gas prices in Edina," she said. "The fewer stations you have per square mile, the less competition, the higher the prices."
Paul Levy • 612-673-4419