The leaves are starting to fall from the trees and a state fuel analyst says gas prices are going to start doing the same sometime soon. Department of Natural Resources analyst Harold Hommes says the gas price fall toward the $2 a gallon mark hit a barrier with a couple refineries stopping production for repairs.
“One in the particular in the midwest was shut down, another one was shut down briefly for an unplanned event. And that has led to some spot shortages,” Hommes says. “and of course, any time supplies get even temporarily interrupted, that usually leads to at least some temporary hike in prices.” Hommes says the planned and unplanned repairs had an immediate impact, but he says it shouldn’t last much longer.
“Last week those prices hiked at wholesale up to about a dollar-85, but have since retreated significantly. So, I do look for this to be a fairly brief spurt. Things are going to get back to normal, I believe, in the next couple of weeks,” according to Hommes. He says there’s often a lag between the drop in wholesale gas prices and the drop at the retail level. “Wholesale gasoline has dropped significantly in the last week and I think it’s just going to take a bit of time and we’ll see those prices at retail retreating too,” he says.
Gas prices averaged $2.51 a gallon in Iowa last week. That was up 9 cents from the previous week and down 53 cents from the same time last year. Diesel prices moved up slightly last week, but Hommes says it’s not related to the refinery issues. He says that is a separate issue as diesel supplies have been tight and the industry is in the process of creating some space.
Hommes says they want to create some space to prepare a different blend that is used when the weather gets colder. “We have to make a transition to at least be prepared for those cold weather conditions,” Hommes explains. The transition tightens up supplies of diesel and causing the price increase. Diesel was up six cents in Iowa last week on average to $2.54 a gallon.
Hommes says the increase in diesel doesn’t impact ordinary drivers very much as not very many use the fuel. It’s biggest impact is on the construction and transportation industries.