People were pumping 10 percent ethanol unleaded fuel at $1.56 a gallon Wednesday morning in Storm Lake - a stunning decrease from the period of near $4 gas earlier this year and about 43 percent below the December average price a year ago. Diesel is down about 27 percent from December '07.
Markets are showing signs that prices may be leveling off, Iowa Deparment of Natural Resources experts told the Pilot-Tribune Wednesday.
"Prices can only go so low. Production cuts that have been made in response to low prices will eventually tighten the supply and demand equation and drive prices up," says Tommi Makila, DNR Energy Policy Analyst. "I suspect current low prices are a temporary aberration. When the global economy recovers, we will surely see higher prices."
The current reductions are the direct result of low crude oil prices to companies serving the midwest. On December 16th, a barrel of West Texas Cushing Sweet Crude Oil settled at $43.60 - a 25 percent decrease over November's price and 52 percent lower than the December 2007 price of $90.50.
And while relief may be temporary, lower heating fuel prices are helping some people compensate to a bitter cold start to the winter season in northwest Iowa.
On Dec. 15, natural gas was trading at $5.76/MMBtu, $1.46 lower than one year ago, a 20 percent decrease. The average retail price of propane in Iowa was $1.78, 14 cents lower than this time last year. The same survey found that heating oil is selling in Iowa for an average of $1.97 per gallon across the state, a 34 percent decrease from December last year.
Generally, gasoline prices are higher in eastern Iowa than the western side of the state. Some of the lower gas pump prices in the state are seen in the Storm Lake area currently. Prices this week range from a low of $1.59 on average in Council Bluffs to $1.75 in Iowa City.