Gauging the gas prices: Breaking down why northern Minnesota has prices above the state average
BEMIDJI—Northern Minnesota gas prices are holding steady with the national average lately rather than the state average.
According to AAA, Beltrami County has an average price of $2.43 per gallon, slightly in front of Itasca at $2.42, Koochiching at $2.40 and Clearwater at $2.39. The national average, according to AAA, matches Beltrami at $2.43 per gallon while the state average sits at $2.32.
In comparison, averages are lower in southern and western Minnesota. For example, the price is $2.26 in Pennington County, $2.25 in Cass, $2.22 in Becker and $2.09 in Mahnomen. One of the factors resulting in variations in prices is the distance the gasoline has to travel.
"In this case, it's likely the distance," said Jerry Zhao, an associate professor for the University of Minnesota Center for Transportation Studies. "The distance to the refinery and the distance to the distribution centers. Both refineries are located in the Twin Cities, so, you tend to see lower fuel prices."
The two refineries producing petroleum products including gasoline are the Flint Hills Resources facility in Rosemount and Marathon Petroleum's St. Paul Park refinery. According to a state petroleum infrastructure report for the Minnesota House of Representatives, gasoline also comes from refineries in North Dakota, Wisconsin and Indiana.
From the refineries, gasoline is sent to terminals via pipelines, both from the facilities in the metro area and from those outside the state. Some of the cities with terminals include Moorhead, Sauk Centre, Wrenshall, Alexandria, Roseville and Spring Valley. Some areas of Minnesota receive petroleum products from nearly a dozen terminals near its borders in adjacent states and Canada, the House report states.
Those terminals are the suppliers for gas stations, including the nearly dozen located in Bemidji. Delivery from the terminals is often done by truck and the prices tend to be higher the farther the gasoline must travel to the pump, according to the Federal Reserve Bank of St. Louis. Additionally, prices can be lower when the owners of the refineries also own the gas stations selling the product.
When looking at gasoline prices, other factors involved range from population density to the amount of taxes. Regarding the latter, the federal excise tax on gasoline has remained at 18.4 cents per gallon since 1993, while the Minnesota gas tax is at 28.5 cents per gallon. The state of Minnesota also has a requirement for gasoline to have 10 percent ethanol.
Aside from those, U of M Center for Transportation Studies Professor Alfred Marcus said supply, demand and competition all play a part.
"It's a function of competition and it's also a function of the desire and willingness of the individual owners," Marcus said. "A lot of times, they're not making much on selling gasoline, they want you to come in, because they're making the most through their convenience stores. If you have a garage attached, you'll make money off that, and they'll make money with the convenience store. It's not as easy to make a lot of money selling gasoline."
Attempts to reach a handful of local gas stations for comment were unsuccessful.