Gas prices driving holiday motorists to travel more

Thousands of Iowans are expected to travel 50 miles or more from home this weekend, according to AAA Travel, taking advantage of the lowest fuel prices since 2004.

Gail Weinholzer with AAA Minnesota/Iowa on Thursday said the number of Americans traveling over the Labor Day weekend is expected to be the highest volume for the period since 2008.

The average price of a gallon of regular gas in Iowa was $2.50 on Thursday, according to GasBuddy.com. A gallon of regular gas cost $2.23 in southwest Cedar Rapids and $2.41 in Iowa City, according to the consumer-driven website.

Harold Hommes, energy analyst for the Iowa Department of Agriculture and Land Stewardship, said 'attractive” retail margins account for the difference in price between Cedar Rapids and Iowa City.

'There is no other explanation,” Hommes said. 'They (retailers) are all accessing the same terminal, so the wholesale or rack price is the same within a range of the spot price and the contract price.”

The price at the pump includes Iowa and federal fuel taxes, which are the same throughout the state. Iowa's gasoline tax rose by 10 cents to 31 cents a gallon on April 1.

Hommes said the current retail margin for a gallon of regular gas varies from about 23 cents in Cedar Rapids to about 40 cents a gallon in Iowa City.

For Candice Kvarda of Cedar Rapids, the drop in gas prices has allowed her to make a major decision.

'I had moved to Cedar Rapids to be closer to where I work because it was costing me so much for gas,” Kvarda said. 'With what I am saving on the price of gas, I decided to go ahead and buy a house.”

Patrick DeHaan, senior petroleum analyst for GasBuddy.com, said gasoline prices plummeted by 18 cents per gallon nationally in August, the greatest decline since 2008.

'We have a national average that's 99 cents lower than a year ago - $2.44 versus $3.43,” DeHaan said. 'I'm sure motorists will have plenty of company on the nation's thoroughfares this weekend.”

DeHaan said as many as 19 states have at least one retailer selling gas below $2 a gallon. Motorists in South Carolina are seeing an average price of $1.99 for a gallon of regular, with some retailers selling gas for less than $1.90 a gallon.

Hommes said gasoline prices are expected to stay fairly low this fall.

'The federal Energy Information Administration is saying that refineries are running at about 95 percent of total capacity, which is a high number,” Hommes said. 'In the next week, with schools back in session, we will see less consumption by motorists driving fewer miles.

'There also will be a shift to cheaper fuel blends with the end of the summer.”

Weinholzer of AAA Minnesota/Iowa agreed with Hommes' analysis of the market, saying Iowa gasoline prices are expected to dip to $2 a gallon or less over the next several weeks.