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Local gas prices up 25% in a year, but there's hope ahead at the pumps

Tuesday, March 25, 2008

Storm Lake gas prices have been running very close to climbing state averages, but there could be a little relief ahead.

After reaching a record high price of $111.80 a barrel on March 17th, crude oil prices fell last week on news that the dollar was strengthening and demand was declining.

Why are the gas prices up? Look no further than the fact that oil prices are up almost 80 percent from March of 2007, when it was going at a relative bargain $57 a barrel.

In Storm Lake, gas prices have been running about $3.14 in recent days, compared to $3.10 in the same period for area cities of Fort Dodge and Ames, and slighlty below the going rate in Sioux City.

There is little variation at the pumps around the state these days. Last week, the lowst price surveyed was $3.08 in Council Bluffs, and the highest $3.27 in Iowa City.

March gasoline prices in Iowa are averaging $3.13 per gallon (10 percent ethanol), - around 11 cents higher than a month ago and up about 25 percent from last year at this time, when gas was going for around $2.47.

The March 15th average price for diesel in Iowa was $3.94 per gallon, 36 cents higher than February's price and up 44.9 percent from the March 2007 price of $2.72. Nationally, diesel fuel hit a record high $4.03.3 per gallon March 20, up 12.7 percent from February's $3.58 per gallon.

On March 20th, natural gas was trading at $9.22/MMBtu, down 18 cents/MMBtu from last month and $1.70 higher than one year ago, a 22.6 percent increase.

A survey completed by the Iowa Department of Natural Resources on March 17, indicated that the average retail price of heating oil in Iowa was $3.54 per gallon, 47 cents higher than last month, and $1.29 higher than the price of heating oil at this time last year, a 57.3 percent increase. The same survey found that propane is selling in Iowa for an average of $2.11 per gallon across the state, 16 cents higher than a month ago, and $0.62 higher than the price at this time last year, a 41.6 percent increase.

If the dollar continues to rebound, prices at the pump should hold or decline slightly.

"Speculation on commodities valued in U.S. dollars, including crude oil, lessened on news that the value of the dollar rose after the latest interest rate cuts by the Federal Reserve," said Jim Bodensteiner, an Iowa Department of Natural Resources Program Planner. "Reduced speculation on crude, along with Department of Energy news that inventories are up and U.S. demand is down, means that crude prices should continue to decline, at least in the short term."



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