It's back! Gas climbs
It's been more than a year since gas prices have been this high in the Brainerd area.
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On Tuesday gas prices were at $2.75 at most area stations, and ranged from a low of $2.63 to $2.89 across Minnesota, according to MinnesotaGasPrices.com. A week ago gas prices were $2.69 a gallon, a month ago $2.49 a gallon and a year ago $1.83 a gallon.
Gail Weinholzer, spokeswoman with the AAA Minnesota-Iowa auto club, said whereas 2008 saw dramatic increases and decreases in gas prices, 2009 had no such spikes in the cost of a gallon of gas.
Indeed, 2008 was a roller-coaster ride for motorists when it came to gas prices. The year started out with prices of $2.87 per gallon. By April of 2008 gas was at $3.30, by May of 2008 $3.79 and by July of 2008 a record $3.99 a gallon.
As quickly as gas prices went up to $3.99 a gallon they fell as the economy crumbled. From $3.99, to $2.99 to $1.99 a gallon, gas in Brainerd-Baxter was on a steady decline starting in September of 2008, hitting a 2008 low of $1.52 on Dec. 11.
The cost of a gallon of gas Tuesday at Brainerd/Baxter stations was $2.75, up 25 cents from a month ago and 93 cents from a year ago. Brainerd Dispatch/Steve Kohls» Purchase reprints of this photo.
In 2009 and now continuing into the new year, those prices slowly and steadily rose, hitting $2.75 per gallon on Tuesday. Weinholzer expects that trend to continue through 2010 for three reasons: a weak U.S. dollar feeds a crude oil price increase, an increase in crude oil prices keeps gas prices up and there's optimism that the U.S. and global economy will improve in 2010 and create more demand.
"It's wishful thinking, perhaps," Weinholzer said.
Chad Knudson, owner of Wild Rice Depot off Business Highway 371 south of Brainerd, said most customers begrudgingly accept the increase in gas prices, though they don't understand exactly why they are rising.
Knudson is in the same boat. As crude oil increases so does the cost he pays for gas to fill his tanks. As to why the cost keeps going up, Knudson believes speculation on the markets is one of the main culprits.
He also believes the poor economy and high unemployment are starting to take their toll on the Brainerd area. People have less money and are traveling less, he said. Weinholzer said statistics back that up, as travel for every holiday in 2009 except Christmas showed people were traveling less.
Knudson also said misinformation from the media is again fueling fears of $3 or $4 gas. He said he has no idea what the price of gas will be tomorrow, a week from now or a month from now.
"Well, they're disgusted like normal," Knudson said of what he's hearing from customers. "It's been going on for a while now. But when you need gas you've got to buy it. You have to do what you have to do."
One sign of hope was that oil prices fell for a second day Tuesday as a global cold spell eased its grip and pulled crude back from a 15-month high.
Chad Schneider last week filled up his sport-utility vehicle at $2.69 per gallon at College Square gas station in Baxter. Since then the cost of gasoline has risen 6 cents a gallon. Brainerd Dispatch/Steve Kohls» Purchase reprints of this photo.
Crude prices have jumped 20 percent in the past month as the coldest weather in years took hold. The weather has boosted demand for heating oil in the U.S. Northeast, and natural gas almost everywhere.
The government said Tuesday that it expects retail gasoline prices to average $2.84 per gallon this year, an increase of 49 cents from 2009. The Energy Information Administration said prices likely will pass $3 per gallon during the spring or summer, largely because of rising crude prices. Prices climbed 0.4 cents overnight to a national average of $2.751 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service. That's about 96 cents more per gallon than last year at this time.
Those prices are rising even though the EIA said gasoline consumption was flat in 2009 compared with 2008 when the economy was in a tailspin.
Just don't expect to see gas prices fall back to the $1.80 per gallon price it was a year ago.
"I wouldn't hold my breath on that," Weinholzer said, but she's also not expecting gas to once again go to $4 a gallon. For that reason, she doesn't believe public outcry about escalating gas prices will be too great.
"I think one of the unfortunate parts of the '08 spike is that anything short of $4 a gallon hasn't been shocking or surprising people, we've kind of gone through it once now. I hate to say people get conditioned, I don't want to be insensitive, but they've seen it. If we start approaching $4 again people would be alarmed. Until something of that nature happens I don't think we'll see a big response from people."
(The Associated Press contributed to this story)