By William Morris, Owatonna People’s Press

OWATONNA — Minnesota drivers will have a little extra cause to be jolly this holiday season.

Gas prices are at their lowest levels since the great recession, and could drop even further. Analyst Patrick DeHaan of Gasbuddy.com says Minnesota, and the country as a whole, are enjoying the payoff from booming oil production around the world that has dropped the price of a gallon by almost 50 cents since last December.

“It’s been a story of oil production that has really crippled the price per barrel this year,” he said. “It’s been a story of slowdowns in China, [and] not only that but large U.S. oil productions have continued, and the Saudis have not cut back anything. OPEC has not acted to cut back the overproduction of oil.”

That adds up to big savings at the pump. The Minnesota statewide average Friday was $1.88 per gallon, with some area stations dipping as low as $1.85. That’s down 12 cents from the already-low prices seen in November and 47 cents from last year’s average of $2.35, and DeHaan expects it to remain at or below this level in Minnesota through Christmas, although other states might not be as fortunate.

“Frankly I think the national average will actually rise slightly,” he said. “Because of some issues taking place in the west coast, there’s been a resurgence of refinery problems in the past week.”

But while Californians currently are paying $2.66 — almost a full dollar more than Minnesotans — the national average currently hovers just above $2. The last time the national average dipped under $2 was March 25, 2009, DeHaan said.

Looking further out, he said prices should remain low through most of the winter.

Tom Kloza, head of energy analysis for the Oil Price Information Service, said gasoline could go as low as $1.79 a gallon by winter, before rising again next year.

And while those low prices aren’t good news for everyone — DeHaan noted Alaska and Texas as states where the drop in oil prices has led to layoffs and budget shortfalls — it certainly sounds like the holidays will be happy indeed for Minnesota drivers.

“Through Valentine’s Day, I see gas prices in Minnesota staying at these relatively low prices, most of the time under $2,” he said. “It should remain at or near yearly lows.”

But that doesn’t mean prices will stay that low.

“There may be some minor increases and decreases throughout the winter,” DeHaan said. “We usually see a pretty sizable lift in prices in the spring that has to do with refinery activity. That’s also when we switch over to cleaner summer gasolines.”

Kloza agreed.

“I do think it will be much higher in the spring,” Kloza said, predicting they could rise to $2.75 a gallon.

Refiners often curtail production to perform maintenance on their plants during the slower late-winter and early-spring periods, and that is followed by the annual summer surge in driving. That yearly decrease in supplies and uptick in demand usually pushes prices up as the beginning of summer approaches.

While gas is at its cheapest price in more than six years, some suggest it should be even cheaper.

Jodie Gunzberg, the head of commodities research at S&P Dow Jones Indices, studied monthly prices for crude oil and gasoline going back to 1988. She found that the two generally went up or down about the same. But so far this year, she said, oil prices are down 29 percent while gasoline is down only 16 percent.

If gasoline prices had behaved exactly the same as oil prices this year, she estimated that consumers would save another 6 percent at the pump — about 12 cents on every gallon.

 

—The Associated Press contributed to this story.