With the stock market flailing and interest rates rising, Minnesota consumers are enjoying — at least for a while — a bright spot with the lowest gasoline prices in two years.
Gas prices stood at an average $2.10 a gallon Thursday in Minnesota, down 27 percent from the beginning of October, according GasBuddy.com, which tracks fuel prices. The decline, which is mirrored in national gasoline prices, has closely followed a crash in global oil prices since early October.
The gasoline was even cheaper, at $1.99 per gallon, Thursday at the 36 Lyn Refuel Station in south Minneapolis, where Sue Christiansen was filling her Subaru Forester. “That’s incredible to me. It is totally a trigger,” she said of the notch-below-$2 price at the station, known for some of the lowest gas prices in the city.
For Christiansen, a Minneapolis resident, lower prices aren’t affecting her purchasing habits, but they are a cause for optimism. “I am not buying more, or driving more often,” she said. “But I do feel better about driving.”
The lowest price anywhere in Minnesota on Thursday was $1.88 per gallon at the Sam’s Club in Sartell, according to GasBuddy. At least nine other Minnesota stations had prices at or below $1.91 per gallon, several of which were in the Red Wing and St. Cloud areas.
The average price in the Twin Cities on Thursday was $2.13 per gallon, while the national average was $2.25 per gallon, according to GasBuddy.
Motor vehicle fuel purchases made up about $2,000 or 3.3 percent of the average U.S. household’s expenditures in 2017, according to the U.S. Bureau of Labor Statistics. Falling gas prices give consumers a bit of an economic cushion, just as soaring prices pinch a household’s budget.
For Chris Omani, who was fueling his Nissan Altima at 36 Lyn on Thursday, lower gas prices have a direct effect on his bottom line.
In addition to a full-time job, he is both a Lyft and an Uber driver. Gasoline costs are mostly paid out of his pocket.
Is he making more money with his driving gig these days? “I’d say so,” Omani said with a smile. A single father, he plows any extra cash back into his family. “I’ve got two little mouths to feed.”
GasBuddy, in a report released this week, concluded the drop in gasoline prices from Oct. 10 through Dec. 31 shaved $230 million off the nation’s daily gasoline bill.
On a more individual basis, if you have an automobile with an 18-gallon gas tank, a fill-up in Minnesota on average cost $51.66 on Oct. 4, compared with $37.80 on Thursday.
The biggest driver of gasoline prices is the price of oil, which has dropped about 40 percent since hitting a nearly four-year high in October. West Texas Intermediate, the benchmark U.S. oil price, sat at $76 per barrel then. It closed around $47 per barrel Thursday after trading mostly below $46 for the past 10 days.
Prices have plummeted as oil production has risen while fear has spread about falling global oil demand.
OPEC and Russia in the fall had ramped up output as U.S. sanctions on Iran were expected to erase a lot of Iranian oil from the global market. But the U.S. then decided to exempt eight countries from the sanctions. Meanwhile, domestic oil producers throughout this country are pumping record amounts of crude; the U.S. became the world’s largest oil producer this year.
Worries over falling oil demand stem from concerns over a slowing global economy, particularly in China, a huge oil buyer. Economists have also fretted about a potentially economy-sapping trade war between China and the United States.
“There are a lot of unknowns in regard to the direction of the White House on a few issues, with trade being a big one,” said Patrick DeHaan, head of petroleum analysis at GasBuddy. “That’s adding to the difficulty of forecasting.”
GasBuddy’s forecast calls for gasoline prices nationally to be under $2.40 per gallon in January and February before rising to a peak of $2.92 in June. Gas prices commonly rise as the weather warms and people start driving more. Also refineries tend to do maintenance outages in the spring, putting upward pressure on prices.
Of course, significant shifts in oil prices are not easy to predict.
Edward Foss of Minneapolis said he wouldn’t mind if gas prices leveled off somewhat. Not that he hasn’t enjoyed the lower prices. As he refueled his Mercury Sable at 36 Lyn, Foss said he’s been driving more lately.
But he said he’s also worried that lower fuel prices might make a recent proposal by Gov.-elect Tim Walz more palatable to the Legislature: an increase in the state’s gas tax for more road funding.