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Gas falls under $3 a gallon

By Staff | Oct 9, 2008

Estherville residents saw signs they haven’t in a long time as gas prices dropped below $3 a gallon on Wednesday EDN photo by Samantha Heerdt

Estherville residents enjoyed a respite from high gas prices Wednesday as super unleaded prices fell to $2.99 a gallon.

While November light, sweet crude rose $2.25 to settle at $90.06 a barrel, the combination of decreased consumer demand and a long-term bear market nationally seem to be keeping fuel prices down.

The immediate upshot locally, though, is that local consumers are getting some relief where they need it most – at the gas pump.

Bob Houseman at Riverside Sinclair in Estherville sees customers as “a lot more positive” after gas broke $3. Houseman noted that in the past 10 days gas has taken nearly a 40-cent drop from an average price of $3.34 a gallon where it stayed for several weeks.

Houseman, who has been keeping close track of oil commodities trading, said new stipulations on market trading started in mid-August have kept speculators from artificially raising gas prices. As a result, gas has come down a full $1 from a high of $3.99 this past summer.

In addition, Houseman notes a marked decrease in consumer demand. “I think the demand has gone down a little bit,” he said.

Houseman also said gas demand traditionally slows in September and October.

“This will be great if it doesn’t go past this,” Houseman said.

With diesel at $3.79 a gallon at Riverside Sinclair, and down similarly throughout the country, the cost of shipping – and ultimately retail prices – should ease if that trend continues.

And no one appreciates lower diesel prices more than local school superintendents who have been finding spiking diesel prices a thorn in their budgets.

Superintendent Randy Collins at Armstrong-Ringsted Community School said lower diesel prices will certainly help the bottom line.

Anything that goes down is good for us,” Collins said. “We’re looking at some real significant increases. I think we’re in the same boat everyone else is.”

Higher fuel costs have of course meant higher food costs for the district school lunch program.

“We’ve been as proactive as we could,” Collins said. “We’ve really become more sensitized in not wasting food.”

The monthly charge for breakfasts has risen from $22 to $25 and lunches have gone from $32 to $36, said Collins.

Estherville Lincoln Central Superintendent Dick Magnuson said lower diesel prices will “absolutely” help the district cope with its bottom line.

Magnuson said that at the start of last school year diesel was $2.97 in September and $4.46 by June, making an average price of $3.54 a gallon.

“This is going to save us quite a bit of money if it stays,” Magnuson said.

Magnuson said the district uses natural gas for heating. Supplies are predicted as adequate for the winter; however, price increases are still expected.

“Let’s hope for a mild winter,” Magnuson said.

Like Armstrong-Ringsted, ELC was forced to increase school lunch prices this year – the first time since 2001. Magnuson said suppliers have been projecting a 7-10 percent increase in food prices.

Breakfast prices for K-6 students rose from 75 cents to $1 and from $1 to $1.25 for adults while lunch prices rose from $1.35 to $1.50 for K-6 and from $2.50 for adults.

Magnuson said it actually costs $1.70 to make a K-6 lunch. “That kind of shows people we’re trying to keep costs down,” Magnuson said.

Green Plains Renewable Energy stock rose the third, straight day Wednesday to close at $6.00 even. The stock enjoyed a 7-cent gain Monday, 15 cents Tuesday and 75 cents Wednesday.

Wayne Hoovestol, Green Plains Renewable Energy CEO, said Wednesday that an upcoming merger with VBV, a company founded by Virgin Atlantic owner Richard Branson, could be a reason for greater confidence in GPRE stock. “Maybe that’s a little bit” of the reason for the increase in GPRE’s prices this week, Hoovestol said.

Hoovestol said VBV is putting $60 million into GPRE at $10 a share. GPRE shareholders will vote on the merger Friday.

Regardless of the reason for the increase in GPRE’s value, Hoovestol said he believes the stock price is undervalued.

Locally, corn prices rose a dime Wednesday to $3.82 at Green Plains Grain in Superior.