It was the first time Tara Albaugh filled the tank of her Dodge Grand Caravan, purchased just four days earlier, and she had reasons to smile.
Her two young children love the new minivan. Their trips around town have been “joy rides.” And then there’s the price of gas — $2.39 per gallon on Friday.
“Anytime I see a price that begins with a 2 I am happy, and it’s really nice to see it below $2.50,” said Albaugh as she pumped fuel at the Penn Avenue Minnoco in her south Minneapolis neighborhood.
As motorists fill their tanks for holiday traveling, U.S. average gasoline prices are at their lowest point in 11 years for a Labor Day weekend, the government said Friday.
The national average, collected on Monday, was $2.51 per gallon, and it has fallen since then. In Minnesota, GasBuddy.com reported the average price in the Twin Cities metro area and statewide at $2.39 per gallon, down 92 cents from a year ago.
That’s not the lowest price Minnesotans have seen at the pump this year. Regular gas briefly dipped below $2 per gallon in January. But today’s prices take a load off the wallet at a time when people are making the final summer trips and sending kids off to college.
David Cramer pulled into a BP station in Minneapolis on Friday, partly to wash the bugs off the front of his daughter’s car, who is off to the University of Wisconsin-La Crosse for classes next week. The price at the pump was $2.39, so he pressed the button and grabbed the nozzle.
“The price of gas has come down so much that even though it only needs half a tank, I wanted to take advantage of it,” Cramer said.
Low prices are expected to stay around for a while, barring unexpected disruption, such as a refinery outage. Two weeks ago, BP restored its giant Whiting, Ind., refinery to full production, ending an outage that had caused prices to spike in Chicago and that sent ripples as far as Minnesota.
Gas prices peaked in Minnesota this year in late July, when regular gas sold for $2.79 per gallon.
“The price of oil is obviously the reason gas prices are so cheap,” said Patrick DeHaan, an oil analyst for GasBuddy, the crowdsourced price service.
In the metro area, wholesalers Costco and Sam’s Club, usually the low-price leaders for members-only gasoline, were selling regular at $2.14 per gallon on Friday, according to GasBuddy. Most other retailers were a dime or more higher.
Crude oil dropped to $38 per barrel last week, then rallied to $46 per barrel on Friday morning. But gasoline demand typically drops after Labor Day as summer travel season winds down, keeping downward pressure on prices even as refineries cut output to perform maintenance.
Lower gas, but not diesel
In Minnesota, prices could dip below $2 per gallon by late December, DeHaan said.
On Friday, the Express Petro station near the fairgrounds in Brainerd was selling gas at $1.99 per gallon, the only under-$2 gas in the state, according to GasBuddy. But that was a promotional price, a reward to customers who have been turned away during a construction project.
“We are redoing the pumps and the tanks and putting in a convenience store, so the pumps were shut down for a week and half while they did the work,” said Barb Stewart, who opened the store on Friday. “It is promotional — to get everybody back.”
People with vehicles that burn diesel fuel, including Minnesota’s farmers, are not seeing lower prices.
Tony Headrick, energy market analyst for CHS Hedging in Inver Grove Heights, said diesel prices rose about 5 cents per gallon in the past two weeks; he expects them to climb another 10 cents to 20 cents per gallon by the fall harvest.
The problem is timing. Midwest refineries, including Flint Hills Resources’ Pine Bend refinery in Rosemount, are expected to undergo routine fall maintenance. Any resulting decline in output disproportionately affects the diesel market, because farm-related demand surges at the same time. “It is unfortunate, but that is the way it is,” Headrick said.