Pain at the pump
It's $2.78 a gallon in the Twin Cities. As the Memorial Day price peak looms, Minnesotans cope by exploring hybrid autos and trimming travel.
Kara McGuire and Joy Powell, Star Tribune
Jerome Tillman has two regrets in these days of sticker-shocking gas prices: He drives a conversion van, and he'll have to cut back on fishing trips to Duluth.
Tillman, 43, drove his kids to Chicago last week, thinking as he filled up along the way that gas prices were "ridiculous."We'll just have to find more activities around the house," he said Friday as he gassed up at a station in St. Paul.
Last year, gas prices in the Twin Cities surged briefly to nearly $3 a gallon in the wake of Hurricane Katrina. They're not to that point now, but they have been rising steadily since February and are prompting some people to change their driving habits.
On Friday, the price of oil hit a new high of $75 a barrel, and the average price for a gallon of regular unleaded gas was $2.78 in the metro area, according to TwinCitiesGasPrices.com. That's 10 cents less than the U.S. average but 33 percent higher than the $2.08 price in the area one year ago.
"I'm not sure you'll see average prices eclipse $3 gallon [in Minnesota], although you'll probably get to $2.90 or so," said Tom Kloza, editor of the Oil Price Information Service in New Jersey. He said he thinks the market rally is nearing its peak.
Angela Veitch, with the federal Energy Information Administration in Washington, said that if gas is going to hit $3 in Minnesota, she expects it to do so in the next five weeks.
Gas prices typically creep up beginning in March, peaking just before Memorial Day.
Jason Toews, cofounder of TwinCitiesGasPrices.com, said there's evidence of people altering their driving habits. In an unscientific poll on the website, 33 percent said gas prices significantly affected their Easter weekend travel plans. "You have to wonder what will happen when gas reaches $3," Toews said.
Despite higher prices than a year ago, resort owners in Ely in northern Minnesota aren't panicking. Summer reservations there are relatively on track for this time of year, said Kerry Davis, a resort owner and president of the Ely Chamber of Commerce. Last summer, consumers considered anything over $2 for gas a high price. But visitors still made their trips up north. "For people traveling four to five hours, it wasn't a big concern," Davis said.
To the south and east of the Twin Cities, at Bill's Bay Marina in Red Wing, sales representative Mike Sutherland said he's not aware of recreational boaters making buying decisions based on gas prices. "They understand there are going to be a lot of costs," he said.
Penny pincher or tree hugger?
At Maplewood Toyota on Friday afternoon, Chuck Trautmann took his turn in one of the dealership's highly popular test-drive cars: the Prius, a gas-electric hybrid vehicle.
Trautmann, 51, of Ham Lake, has been thinking for some time about getting a Prius, which can get roughly 50 miles per gallon, depending on conditions, and reduces emissions. At Maplewood Toyota, the Prius is sold out, and there's a waiting list that stretches nearly 10 months, said Hugh McLeod, the dealership's "hybrid center director" and webmaster of www.mnhybrid.com.
Currently, there are more than 200,000 hybrids on the road in the United States. The number is expected to grow to 780,000 by 2012, according to projections from J.D. Power and Associates.
McLeod said the dealership has a list of buyers for Toyota's newest hybrid, the Camry, which will debut in May.
Two hundred miles north of the Twin Cities, Scott and Kelly Erickson of Grand Rapids, Minn., are shopping for their third hybrid. Scott Erickson, the Grand Rapids police chief, said he'd like to see his officers driving hybrid SUVs.
But hybrids have a downside: higher costs. The price premium for a hybrid on average is $3,000, but goes as high as $7,000 for an SUV version such as the Toyota Highlander. "It still takes you over six years of driving over 20,000 miles a year to get nearly the premium you pay for the vehicle," said Jesse Toprak, an analyst with the auto research website Edmunds.com.
Buying a hybrid could qualify you for an IRS tax credit ranging from $650 to $3,400. The credit starts phasing out after a manufacturer sells 60,000 hybrids for the year.
Another option some drivers are turning to is the flex-fuel vehicle, which can operate on regular gasoline or E-85, a blend of 85 percent ethanol and 15 percent gasoline.
"The majority of people ordering these vehicles are planning for the future, taking advantage of a motor that has alternatives," said Wayne Peterson, a sales consultant at Saxon Ford in New Brighton. Peterson just bought a flex-fuel F-150 pickup.
Minnesota has more than one-third of the nation's 600 E-85 pumps, and the fuel typically costs 30 to 50 cents per gallon less than regular unleaded. But it carries you fewer miles per gallon. And critics argue that it takes a lot of energy to make it and that there are too few plants to produce it.
In a light drizzle Friday afternoon, Kat Beaulieu of St. Paul drove his fuel-efficient Honda Accord. But Beaulieu, 40, said he much prefers pedaling his bicycle as a way to trim U.S. use of petroleum and help reduce emissions into the environment. "If you live within 10 miles of where you work, then you should ride your bicycle. That's what we all should do."
He may get his way. Jason Alvey, manager of Erik's Bike Shop in Bloomington, said he's selling more lightweight bikes suitable for commuting than he did last year. "I wouldn't say [customers are] passionately complaining about gas prices. But there's definitely an increase in the number of people looking at biking as a viable transportation option," he said.