Archived Story

Gas prices are on the upswing in Minnesota

Published 5:24am Wednesday, January 1, 2014

By David Shaffer

Star Tribune 

Minnesota’s less-pain­ful gaso­line prices have ev­apo­rat­ed.

Motor­ists had been pay­ing less than $3 per gal­lon at the pump through much of De­cem­ber, in­clud­ing a 2013 state-re­cord av­er­age low of $2.92 a few days be­fore Christ­mas.

But it didn’t last. The state­wide av­er­age price of regu­lar gaso­line rose 24 cents to $3.16 per gal­lon over the past 12 days, ac­cord­ing to AAA data.

“That is a very dra­mat­ic price hike, and it is not some­thing that driv­ers in Minnesota see very of­ten,” said Michael Green of AAA’s Daily Fuel Gauge Report, which tracks gaso­line prices based on cred­it-card swipes.

Green said prices have stabilized in the past cou­ple of days. A hol­i­day-sea­son price jump also hap­pened last year — only to be fol­lowed by sig­nif­i­cant­ly low­er prices in Jan­u­ar­y.

It’s been a year of seesaw gas prices. Minnesota is one of two states where gas prices in 2013 at one point ex­ceed­ed $4 per gal­lon — back in May — while drip­ping be­low $3 at oth­er points, said Tom Kloza, chief oil an­a­lyst with ­

Sev­er­al fac­tors may ex­plain the lat­est up­tick, ana­lysts said.

Peo­ple are driv­ing more, boost­ing gaso­line de­mand. The price of light crude oil also is up this month to $99 per bar­rel. Some Midwest re­fin­eries are not op­er­at­ing at peak, and the St. Paul Park re­fin­er­y, the small­er of two re­fin­eries in Minnesota, could face a strike Tues­day if ne­go­tia­tions with the un­ion rep­re­sent­ing near­ly 200 op­era­tors reach an im­passe.

Even with the lat­est in­crease, Min­ne­so­tans still paid less than motor­ists in 32 states, with Con­nec­ti­cut driv­ers pay­ing $3.70 per gal­lon, the high­est av­er­age price in the Lower 48 states, AAA data showed. Mon­tan­a had the low­est ­av­er­age price on Mon­day, $3.01 per gal­lon.


What’s going up?

Driving and fuel de­mand are up. AAA, which also tracks hol­i­day trav­el, pro­ject­ed that 85.8 mil­lion Ameri­cans — or one in four — are tak­ing road trips be­tween Dec. 21 and Jan. 1. It is the fifth con­sec­u­tive annu­al in­crease, and the high­est trav­el vol­ume ever pro­ject­ed by the mem­ber­ship trav­el serv­ice.

U.S. fuel con­sump­tion in­creased in No­vem­ber to the high­est level for that month in six years, with gaso­line up 5.4 percent, the American Petroleum Institute re­port­ed last week.

“The num­bers have been pret­ty spec­tac­u­lar,” Kloza of said of the late-year spike in de­mand.

But he add­ed that “gaso­line de­mand is very, very lumpy” and it could fall off in Jan­u­ar­y as low tem­pera­tures and win­ter weath­er keep driv­ers at home. That tends to bring prices down, as hap­pened last Jan­u­ar­y when Minnesotans were paying less than $3 per gallon.

Look­ing a­head, Kloza said, many com­mod­i­ty fu­tures trad­ers seem to be bet­ting on high­er pe­tro­le­um prices.

“We are going to end 2013 with the great­est a­mount of fi­nan­cial mon­ey in­vest­ed in the long side of crude,” he said. “There is lot of mon­ey that has pumped up the price.”

Alex Breitinger, a com­modi­ties fu­tures bro­ker with ­Par­a­gon In­vest­ments in Valparaiso, Ind., said re­fin­er­y shut­downs in the North­east and in­ter­na­tion­al fac­tors are af­fect­ing the world oil market.

The mar­ket had an­tic­i­pated a sig­nifi­cant flow of oil from Iran amid op­ti­mism that an ac­cord over its nu­clear weapons program would ease trade sanc­tions, he said. “That didn’t hap­pen,” Breitinger said, so trad­ers stopped bet­ting on a peace dis­count.

He also said that U.S. oil com­panies, though bar­red from ex­port­ing crude oil, are now ex­port­ing re­fined gaso­line to Lat­in America.

“U.S. cit­i­zens are now in com­pe­ti­tion with bid­ders from Mexi­co and oth­ers in Lat­in America,” he said. “That re­al­ly hadn’t been going on un­til now.”

Regional pro­duc­tion is­sues also af­fect prices. A large re­fin­er­y in Le­mont, Ill., is ex­pect­ed to ramp up pro­duc­tion in ­Jan­u­ar­y af­ter a fire in Oc­to­ber cut pro­duc­tion, ac­cord­ing to Bloomberg News.

Mean­while, the St. Paul Park re­fin­er­y faces a Tuesday strike dead­line by nearly 200 work­ers rep­re­sent­ed by Teamsters Local 120. The un­ion and the re­fin­er­y’s man­age­ment are con­tinu­ing to ne­go­ti­ate.

On Fri­day, the un­ion warned the refinery is “on the brink of shutdown.” Its business agent Chris Riley also said a prob­lem with a crude oil unit had re­duced the re­fin­er­y’s out­put. The refinery owner has neither con­firmed or denied the out­age.

—Distributed by MCT Information Services

By using this website’s user-contribution features, including comments, photo galleries, or any other feature, you agree to abide by the terms of use. Please read this agreement in its entirety because it contains useful information that will help you better understand the rules and general "good manners" that are expected when contributing content to this website.

Sign in to Comment | Need help commenting? Click here

Editor's Picks