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Gas may hit $4 based on past trends

GRAND FORKS - The new year could bring price peaks exceeding $4 for a gallon of regular gasoline if past trends hold true, according to analysts.

"The chances are pretty good that we'll see fairly sharp increases," said Gene LaDoucer, spokesman for AAA North Dakota.

Based on the average retail price of gasoline at the start of the year and the amount prices historically climb in a year, a gallon of regular could easily exceed $4 by spring, analysts say.

LaDoucer said there is usually a 36 percent price spike from Jan. 1 to the annual peak.

"A 36 percent increase from where we are now would put prices in the neighborhood of $4.42," LaDoucer said. "We certainly hope that's not the case."

Gasoline prices typically peak around Memorial Day, when travelers push up demand. Refineries usually produce less in the spring as they switch from winter to summer blends.

In the past year, drivers in the state paid a higher average annual price, $3.57 a gallon, than any year before. The previous highest annual average of $3.24 was set in 2008, AAA said.

Patrick DeHaan, an analyst with a North Dakota gas price website, also said $4 per gallon was a likely possibility based on average yearly price increases.

According to that website, over the past seven years, the average price increase from the year's starting price to its peak was 93 cents nationwide. Last year began with a national average of $3.05 and peaked at $3.96 per gallon May 11.

"It doesn't bode well," DeHaan said.

The expiration of the federal subsidy for ethanol could also contribute to higher prices. With tax credits for ethanol blenders expiring Jan. 1, the price of a gallon of gasoline containing 10 percent ethanol could increase 3 or 4 cents, LaDoucer said. The price increase for blends with higher ethanol contents could be higher.

Russ Wilson, vice president of Tharaldson Ethanol in Casselton, said wholesalers like his company did not receive the subsidy and wouldn't be affected by its expiration.

The price increases will be hard to absorb for households that have not seen increases in their incomes.

"It'll have a profound effect," DeHaan said.

LaDoucer said he hoped price increases do not follow historical trends, but it was likely they will.

"Consumers should be prepared," he said.