Now that the price of gas is down below $3 per gallon in parts of the Corridor for the first time in almost a year, odds appear good that it will stay a while.
Pump prices for E10 fuels slipped below $3 per gallon at some retailers in the Cedar Rapids metro Wednesday, and other retailers followed suit on Thursday. Prices fell an average of 5 cents per gallon from Wednesday to Thursday, according to AAA, and were as low as $2.969 on the east edge of Marion.
Compared to a year ago, gas prices in Cedar Rapids were about 8 cents per gallon less, although prices statewide averaged two cents per gallon higher. Cedar Rapids has seen a big increase in the number of competing gasoline retailers during the last year as Ankeny-based Kum & Go has opened a series of new convenience stores.
At the Kum and Go at 3370 Seventh Ave. in Marion, Kyle Newman, 33 of North Liberty, said even the marginal drop made him want to top off his vehicle.
“I haven’t seen it under $3 in a long time,” Newman said Wednesday. “I looked over and noticed it, and even though I’m tired, I decided to stop.”
Newman, who commutes to Cedar Rapids daily, said he hopes the drop in gas prices isn’t temporary.
Prices seemed to tumble rapidly across the Cedar Rapids metro after hitting the psychologically important $3 mark.
It was a different story in the Iowa City metro, where gas prices trend higher. The lowest prices reported there by motorists Thursday morning on IowaStateGasPrices.com was $3.19 per gallon.
Gas prices hadn't been at $3 in major Iowa markets since late December of 2011 or early January of 2012, depending on the location, according to Harold Hommes, who tracks energy and livestock markets for the Iowa Department of Agriculture.
Hommes said sub-$3 gas prices began earlier this week in the Des Moines area but are currently still the exception in Iowa. The average price statewide Thursday closer to $3.20 per gallon, according to AAA of Minnesota/Iowa.
Gas prices tend to drop every year around this time due to lower fuel consumption in the winter months, and the lower cost of producing cold season gas formulations at refineries, Hommes said.
Even so, there's more gas to go around this year, Hommes said. Petroleum refiners have had good profit margins, thanks partly to a relatively mild hurricane season that minimized production disruptions and from slipping crude oil prices, among other things.
"Lackluster demand is putting pressure on them (petroleum marketers) to move it," Hommes said. "There are no profits unless they're selling gas."
In short, Hommes said, "the trend is our friend right now." Hommes expects gas prices to remain relatively stable through the holidays, and possibly to decline in early January.
The news is good for holiday travelers, according to Gail Weinholzer of AAA Minnesota/Iowa. AAA projected Thursday that holiday travel will increase 1.6 percent over last year's level, with 91.8 million people hitting the road.
That will still be about one-half million holiday travelers short of the record hit in the 2006-2007 holiday season, Weinholzer said.
The holiday travel forecast this year wouldn't be complete without a discussion of the looming fiscal cliff. The combination of expiring tax cuts and federal budget cuts looming in January has become a household word.
Weinholzer said the fiscal cliff has injected a level of uncertainty into this year's holiday travel forecast by complicating the task of preparing an accurate household budget.
"It is important that Congress and the President work together to quickly resolve the situation for the good of the nation," Weinholzer said.(Gazette reporter Christy Aumer contributed to this report)