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Published December 17, 2011, 01:47 PM

Gas Prices Dip Below $3 in Grand Forks, Lowest in State

Grand Forks, ND: Gas prices in Grand Forks have reached unfamiliar territory, below $3 per gallon and a place as the lowest in the state. The price for a gallon of regular gasoline Friday was $2.99 a gallon at the Flying J at Interstate 29 and 32nd Avenue South, down a dime from the day before, according to NorthDakotaGasPrices.com, a website where members post local prices.

By: Christopher Bjorke, grandforkshearld.com

Gas prices in Grand Forks have reached unfamiliar territory, below $3 per gallon and a place as the lowest in the state.

The price for a gallon of regular gasoline Friday was $2.99 a gallon at the Flying J at Interstate 29 and 32nd Avenue South, down a dime from the day before, according to NorthDakotaGasPrices.com, a website where members post local prices.

Friday afternoon, a nearby Cenex at 3850 32nd Ave. South also dropped 10 cents to match the price at Flying J.

The price at the Grand Forks Sam’s Club was $2.91 Friday, though gas at that store is available only for those paying for a Sam’s Club membership.

According to NorthDakotaGasPrices.com, the Grand Forks stores had the lowest prices in North Dakota, an unusual occurrence in a state where Fargo stations typically post the lowest prices.

The average price of a gallon in North Dakota was $3.18, according to the gas website. It has not been below $3 since last December.

Up and down

Patrick DeHaan, an analyst for the parent company of NorthDakotaGasPrices.com, said that crude oil prices had been volatile in the last week, fluctuating between $100 and $93 a barrel.

“This week has been an exceptional week,” he said. “With crude oil prices all over the map, it’s likely that prices could be more volatile.”

Wholesale prices — what stations pay for their supplies – have been down slightly in the last week about 5 to 10 cents, DeHaan said, while the national average for retail gasoline had fallen about 3 cents.

Prices at the pump generally do not fluctuate as widely as wholesale prices, he said. Station owners tend to adjust prices slowly, to not drive away customers while prices are going up and to not lose their profit margins while prices are on the way down.

“That’s why prices go down so slowly,” DeHaan said. “That’s when stations make their margins.”

Competitive volume

That pattern means the recent 10-cent drop in Grand Forks is unusual, he said, but could be because of the size of Flying J’s business.

“They do a lot of volume, and that enables them to lower their prices more quickly,” DeHaan said.

The travel plaza sits next to an Interstate exit, guaranteeing a steady stream of travelers, many of whom will spend money on higher-margin purchases inside the station. The ability to lure drivers with low prices can push neighboring stations to do the same, as Cenex did Friday afternoon.

“That’s just as important for station owners, getting people through the doors,” DeHaan said. “As stations realize they’re losing customers to that volume, they want those customers.”

No one was available to answer questions at Flying J’s corporate offices in Tennessee and the company would not authorize the local station manager to talk about prices. No one was available to talk at local Cenex stores.

Roger Orchard, owner of wholesaler Orchard Oil Co. in Grand Forks, said that the wholesale prices stations pay are down, “but not nearly as much as what you’ve seen at the pump.”

He said that the recent low retail prices around Grand Forks were probably down because of local competition.

“They can’t keep these prices where they’re at right now based on wholesale prices and stay profitable for long,” he said.

Reach Bjorke at (701) 780-1117; (800) 477-6572, ext. 117; or send e-mail to cbjorke@gfherald.com.

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