Gas prices could fall below $3 per gallon this fall

Here's good news for motorists: Iowa gasoline prices, driven by global market forces and seasonal trends, are dropping sharply and are most likely headed below $3 per gallon this fall in the Des Moines area, petroleum analysts and industry observers said Tuesday.

Gas prices have already broken the $3 mark in western Iowa, where five stations in Sioux City were selling ethanol-blended gasoline Tuesday for between $2.95 and $2.99 per gallon. Mason City in north-central Iowa had two stations at below $3 a gallon as well.

"I think it's awesome. It's about time that gas prices are coming down. It makes a huge difference," said Mark Thompson of Urbandale. He's an insurance industry employee who pulled his Ford pickup truck into a QuikTrip store near downtown Des Moines, where gasoline was selling for $3.09 a gallon.

Statewide, the average Iowa price Tuesday for midgrade gasoline was $3.22 a gallon, down from $3.28 a week ago and $3.48 a year ago.

In the Des Moines area, the average price for gasoline Tuesday was $3.12 a gallon, although some stations' prices were as low as $3.05.

Tom Kloza, chief oil analyst for GasBuddy.com, told The Des Moines Register he pins the decline in gasoline prices nationally on four factors:

Crude oil prices: Global prices are down about $15 a barrel from June. North American crude oil prices are down a similar amount.

Switch to winter-blend fuel: The specifications for gasoline change every Sept. 15. Refiners can now put in cheaper components (like butane) and make less-costly gasoline.

Supply: Demand after Labor Day typically falls off by about 400,000 barrels of gasoline per day. Autumn demand is generally about 270,000 barrels per day under driving-season demand.

Ethanol: Prices for ethanol, which is blended into gasoline, have plunged by about 40 cents a gallon in the last month. Iowa is even seeing some lower E15 prices, with Murphy USA hosting grand openings at stations now featuring E15 at introductory prices of $2.15 gallon.

Gail Weinholzer, director of public affairs for AAA Minnesota-Iowa, said another factor is that a relatively calm hurricane season has meant that disruptions have been minimized at Gulf Coast oil refineries.

The national average cost for regular gasoline Tuesday was $3.38 a gallon, down a nickel from a week ago and 8 cents from a month ago.

"All the factors are going in the consumer's favor at this point," Weinholzer said. She added, "I think you could see the Des Moines average drop another 10 cents to 20 cents a gallon between now and November."

Harold Hommes, marketing bureau chief at the Iowa Department of Agriculture and Land Stewardship, was equally optimistic.

Barring a major international crisis or other unanticipated events, many Iowans are likely to see gasoline this fall in the range of $2.85 to $2.90 a gallon, he said.

"I look for continued downward pressure," Hommes said, adding he expects "very, very competitive gas prices" in the months ahead.

Gregg Laskoski, a senior petroleum analyst in Tampa, Fla., for GasBuddy.com, offered a similar analysis, remarking, "Iowa is in great shape. I hope to see those prices in Florida here soon."

Clint Carpenter, a Des Moines school bus driver who owns a Ford pickup truck, said the talk of bargain-priced gasoline made him recall driving while in high school in 1995.

He remembers seeing gasoline as low as 99 cents a gallon at the time, although the national average was $1.15 a gallon.

Looking at a gas station sign Tuesday that read $3.09, Carpenter quipped, "I better hurry and gas up."