Gasoline prices in Minnesota are slipping below $2 per gallon and likely are headed even lower.
Some stations in the Twin Cities began selling regular gas for under $2 in recent days, although on average, metro-area gasoline sells at $2.08 per gallon, according to GasBuddy.com, the crowdsourced website.
When Danny Ripka of Minneapolis pulled into a BP station at 36th Street and Lyndale Avenue South on Thursday, his car’s amber low-fuel light was on. As he waited in line for an open pump, he watched one driver confront another motorist about jumping ahead.
They were waiting to buy gas at $1.93.
“That is ridiculous,” said Ripka. “I can’t remember the last time I saw it that low.”
The average gasoline price has dropped 17 cents in the Twin Cities over the past week. Rochester’s average price already has dropped below $2 per gallon, according to the AAA Fuel Gauge Report.
“There is a lot more room for prices to fall,” said GasBuddy petroleum analyst Patrick DeHaan. “We are really in only the third inning of the decrease.”
Unless a significant disruption happens in the commodities market, DeHaan said gasoline prices across Minnesota and the nation should be under $2 by Thanksgiving Day and drop 15 cents to 30 cents more by Christmas.
Some stations, especially wholesale clubs and dealers trying to beat everyone else’s price, could be under $1.70 per gallon, he said.
“It is a great situation for drivers,” added Michael Green of the AAA Fuel Gauge Report, which also tracks gasoline prices. “Prices are dropping very quickly right now.”
Minnesota gas prices last dipped below $2 per gallon last January. DeHaan said this is the first time since 2008 that gas prices are around $2 near Thanksgiving.
Motorists typically drive less in the fall and winter, reducing fuel demand, which pushes down the price. This post-Labor Day decline can last until late winter. Then the trend reverses in the spring, and gas prices typically begin to climb to summer highs.
Minnesota’s average gasoline price hit $4.27 per gallon in May 2013, and mostly stayed above $3 until November 2014, when it fell below $3 and has stayed there ever since, according to AAA price data, which is drawn from credit card transactions at gas stations.
Disruptions in the oil commodities market from wars, refinery accidents and other events can trigger price spikes anytime. That happened in August when the Midwest’s largest refinery had an accident that cut production for weeks.
But the long-term decline in crude oil prices explains the low prices this November, Green and DeHaan said. Last November, benchmark domestic crude oil traded at $74 per barrel. Recently, domestic crude has traded at just over $40 per barrel, a drop of more than 40 percent. North Dakota crude was priced at $30 per barrel this week at a Twin Cities refinery.
“The difference this year is the drop in the crude oil price,” said DeHaan. “It is that difference that opens the door for us to have sub-$2 gasoline.”