Cheap gasoline. It's back.
Minnesota's average price for unleaded regular gasoline dropped below $3 this week, according to pricing services GasBuddy.com and the AAA Daily Fuel Gauge Report.
"It is a whale of a deal — it is like it's on sale," said Todd Brazman of St. Paul as he pumped a tankful of $2.89-per-gallon gasoline Tuesday morning into his pickup truck at Capitol City Station in St. Paul.
Inside the adjacent retail store, a smiling owner, Todd Knudten, said his prepay policy for cash customers is having an unusual side effect.
"People are paying what they typically pay and having to come back in for change," he said.
Gasoline prices across the nation have fallen as world oil prices have dropped to the lowest levels in years.
Minnesota is one of 10 states where regular unleaded is selling at or under $3 per gallon, according to GasBuddy.com, which uses crowdsourcing to collect U.S. gasoline prices. Minnesota gas prices are down 29 cents compared with the September average, according to GasBuddy.
This week is the first time since late December 2013 that Minnesota's average unleaded regular price has dropped below $3.
On Tuesday, prices dipped below $2.90 at a handful of stations around the metro, including Food & Fuel in Minneapolis on Central (2.85), Costco in Maple Grove ($2.84) and Clark in Inver Grove Heights ($2.85).
At Jensen's Care Care on Penn Avenue S. in Minneapolis, Ben Premack pumped gas into his car beneath a neon sign that read $2.98.
The Marathon-brand station dropped the price below $3 on Monday, said employee Kaehn Hale.
Premack didn't get the sub-$3 price because his car requires more expensive premium fuel. Even so, he said, "I will take any savings I can get."
Although the East and West coasts are still seeing $3.50 gasoline, the average price nationwide was $3.18 per gallon on Tuesday.
GasBuddy's chief oil analyst, Tom Kloza, has been predicting that gas prices would drop dramatically this fall. He said in an interview Tuesday that it has happened rapidly, and may not be over.
"It's occurred quicker than we thought it would," Kloza said. "If you ask the question, 'Are we near the bottom?' the answer is a big resounding no at the moment."
Crude oil down
The benchmark world oil price slumped to its lowest level in four years on Tuesday, settling at just over $85 per barrel, down about 30 percent from four months ago.
The decline is driven by weaker oil demand worldwide and a decision by OPEC countries to maintain output and sell into the glutted, lower-priced market, according to Bloomberg.
Midwest refineries, including two in the Twin Cities area that supply much of Minnesota, are usually able to purchase crude oil at lower-than-world prices from North Dakota and Canada. North Dakota light sweet crude was priced at $70.25 per barrel in the most recent Oct. 9 Flint Hills Resources bulletin, down from $75.50 per barrel a week earlier, and from $78.46 per barrel in August.
Those slumping oil prices could mean lower profits in North Dakota, but the drop has not yet reached the point of no returns for most drillers. According to the North Dakota Division of Mineral Resources, drillers in the four most active North Dakota counties can break even at crude oil prices ranging from $28 per barrel to $42 per barrel.
Gasoline isn't the only fuel that's dropped in price. Kloza said jet fuel, diesel and heating oil also are benefiting from low crude oil prices.
Ethanol also is cheap right now, thanks to low corn prices and increased output from reopened plants, including two this year in Minnesota. The price doesn't have a big effect at the pump because most gasoline contains only 10 percent ethanol.
Yet low ethanol prices are evident at stations selling the highest ethanol blend E85, which is 85 percent ethanol and can be used only in flex fuel vehicles. On Tuesday, E85 was selling for as low as $2.05 per gallon in Minnesota, according to E85prices.com.
Staff writer John Ewoldt contributed to this report.