Cheap gas a holiday gift, but one with uneven benefits

Delighted consumers are pumping gas at less than $2 per gallon in some parts of the Twin Cities, thanks to three months of steady price declines that have produced tangible savings for long-suffering commuters while leaving others awaiting their own reprieve.

"I haven't seen gas this cheap since I was in high school," Mychael Harris, 36, said Friday at a BP station in south Minneapolis where unleaded was $1.99 a gallon. "This is a blessing. This is around the same price I paid when I got my first car. It's almost too good to be true."

Nationally, the average price for a gallon of gas has dropped for each of the past 92 days. On Friday, the average price was $2.20 per gallon in Minnesota, exactly 50 cents lower than a month ago and 12 cents below the national average, said Gail Weinholzer, director of public affairs for the Minnesota-Iowa AAA.

That puts $8 back in a consumer's pocket for a 16-gallon fill, which translates to two fancy coffees or a hot-wax drive-through carwash.

"The savings per tank of gas is significant," Weinholzer said.

The sinking prices have helped drive a record holiday-travel season. Some 98.6 million people have driven or flown this holiday week, up 4.2 percent from last year, the largest increase since 2009 over 2008, Weinholzer said.

While it's easy to see how the average Minnesotan filling up the tank might be happy about the extra jingle in the pocket, the benefits of cheaper gas have yet to be felt by some. Diesel prices have not dipped as precipitously as regular unleaded gas prices, so trucking companies aren't reaping big savings yet. Airlines aren't slashing fares.

But consumers are delighted. When Minneapolis resident Win Mitchell drove to the in-laws' house last week, he was excited by what he saw on the Farmington roadside: gas for $2.09 a gallon.

Mitchell has two kids who play youth hockey — on different teams. That means he's got the requisite SUV to haul kids around with piles of sticks, skates and pads. One day they're in Mound; the next they're in Richfield or northeast Minneapolis. Then there are his daughter's swim meets at Southwest High School.

So when gas prices dip, the savings are real, Mitchell said.

In some areas, the lower prices aren't the boon that might be expected.

Airlines aren't wiping out those baggage fees or fuel surcharges they slapped on when gas prices were higher. Basic supply and demand is keeping air travel costly. And airlines, like some trucking firms and other businesses that consume a lot of fuel, often lock up prices in advance in order to avoid price volatility.

Low oil prices are not welcome news in North Dakota, which is already experiencing a drop in production.

Hennepin County buys 800,000 gallons of fuel per year, but falling prices haven't produced a windfall for county coffers. That's because most of the county's gas is purchased ahead of time on a contract with the state.

The county just bought gas for next year. The county paid $2.67 and $2.89 per gallon for unleaded and diesel, respectively. About 63 percent of the gas the county uses is unleaded.

"We have some winnings," said budget director Dave Lawless. But mileage reimbursement for county employees also hews to the federally set amount, which will increase soon despite lower gas prices.

Other businesses can be more nimble with mileage reimbursements. Delivery drivers for Twin Cities-based Pizza Luce see their mileage reimbursement rate cut when prices dip at the pump. Customers, however, aren't shifting preferences in whether they walk in for pizza or get it at their homes.

Weinholzer noted that diesel users don't benefit from the same forces that keep unleaded gas prices low. The refineries that produce diesel are the same ones that process winter heating oil. Concern about a repeat of last year's heating fuel shortages combined with a cold November meant diesel production dipped in favor of heating oil. Less diesel fuel on the market means higher prices for diesel fuel.

That means those semitrailers hauling goods to market haven't seen the same steep price drop. "Those folks aren't experiencing the same joy as the rest of us," Weinholzer said.

Auto dealers welcome the lower prices, although the shift in customers' buying habits came before the recent drop. "Right now is a very good time in the auto business," said Alan Krutsch, director of marketing for Apple Autos, which sells Ford, Lincoln, Chevrolet and Buick vehicles at several locations.

"When we saw gas prices over $4 a gallon, people wanted to trade in their SUVs," he said. "Hybrid mixes were hard to get."

As the price of gas headed down, fuel economy was no longer the determining factor in buying a vehicle. "People buy what they want," Krutsch said, basing decisions on myriad needs, not just miles per gallon.

Mitchell's family is a case in point. Their most recent purchase was an SUV for the hockey hauls.

Pouring less money into the gas tank doesn't stem the flow of another precious commodity, he said.

"From a time standpoint, we still do a lot of commuting," Mitchell said.

Staff photographer Leila Navidi contributed to this report. Rochelle Olson • 612-673-1747