Iowa gas prices rose 18 percent in 2010, headed higher

Iowa motorists paid higher gas prices in 2010 after a recession-driven downturn in 2009, and they can expect that trend to continue in 2011.

The average price of ethanol-blended mid-grade gas in Iowa ended the year at was $3.032, according to the Oil Price Information Service, up nearly 18 percent from $2.57 at the end of 2009.

In Cedar Rapids, the average price on Friday was $3.01 per gallon, up 17 percent from $2.58 per gallon at the end of 2009. Iowa City-Coralville prices were not available.

Rising crude oil prices have been the primary factor behind the upward gasoline price trend in the past few months, according to the Iowa Office of Energy Independence's monthly fuel price survey. The price of a barrel of crude oil for February delivery was $91.49 as of Wednesday, but by Friday had fallen below $90 per barrel.

Crude oil hasn't been above $90 per barrel and gasoline hasn't been above $3 per barrel since October 2008.

The past year has been the second most expensive for crude oil in history behind 2008, the state energy office reported.

The price of crude oil has already outstripped levels predicted in the federal government's last short-term energy forecast. The Energy Information Administration on Dec. 11 forecast that oil prices would average $84 per barrel from October through March, and would reach $89 per barrel by the end of 2011.

The federal agency's estimate of gas prices for the winter isn't holding up. It was predicting that retail gas prices would average only $2.88 per gallon this winter.

Iowa gas prices remained four cents per gallon below the national average of $3.072 per gallon on Friday.

The rise in diesel prices has been even more rapid over the past year, averaging about 20 percent. The Oil Price Information Service reports diesel prices averaged $3.29 per gallon in Iowa on Friday, up from $2.75 a year ago.

The average trading price of natural gas on Dec. 28 was $4.11 per decatherm 41.3 percent lower than a year ago. The tradiing price has only a limited relationship to the price consumers pay for natural gas delivered to their home because utilities use a variety of strategies to moderate season spikes in natural gas prices to their customers.

The average price of propane in Iowa increased six cents per gallon last month to $1.73 per gallon, while the average price of heating oil rose 16 cents per gallon to hit $2.93 per gallon.