Gas prices to be lowest for Labor Day in 11 years

With stock markets hitting some major bumps recently, cheap gasoline should provide Americans a far smoother ride this Labor Day weekend and the likely prospect of $2 pump prices by Christmas.

Average regular unleaded will cost the least for the Labor Day break since 2004, AAA says. The national average was $2.44 a gallon Thursday, down 9 cents over the past week and $1 below the year-ago price.

Prices have fallen sharply in recent days and are expected to continue to edge down through the weekend after BP’s refinery in Whiting, Ind. — the largest in the Midwest — was repaired in late August, increasing gasoline supplies, says AAA spokesman Avery Ash. The facility was unexpectedly shut down earlier in the month.

Gas prices across Montana have been rising since early February when they briefly dipped below $2 a gallon. On Friday, the average price for a gallon of regular was $2.67, with the cheapest to be found south of Libby. The fuel price-tracking website Gasbuddy.com reported that motorists in Trout Creek could fill their tanks for $2.49 a gallon at the Trout Creek Cenex Station.

Around Great Falls the least expensive gas could be found at the Cenex station in Sun Prairie, where a gallon of regular was selling for $2.55. Within Great Falls city limits, most stations offered regular for between $2.61 and $2.65 a gallon.

The lower costs are coming despite what AAA expects to be the busiest Labor Day weekend for motorists since 2008, with 30.4 million travelers hitting the road, up 1.1 percent from a year ago. Credit solid job and income growth, along with the bargains at the pump.

Gas prices generally have traced the dramatic decline in oil prices since February amid high crude production both in the US and overseas, and concerns about weakening global demand.

Oil prices have been volatile recently, dropping below $40 a barrel early last week for the first time in six years and then rallying as much as 28 percent in recent days on reports of lower-than-estimated U.S. production and possible cuts in output by the Organization of the Petroleum Exporting Countries. West Texas Intermediate futures closed up 50 cents Thursday at $46.75 a barrel, though that’s still down from about $61 early this year.

The recent oil rally could filter into gasoline, modestly propping up prices after the holiday weekend, Ash says.

Yet pump prices are headed down in coming months, analysts say. They remained higher than the fall in oil would suggest because of the most active U.S. summer driving season in eight years and requirements for reformulated summer gasoline blends.

Both will be over by mid-September, pushing down gas prices, and the slide will intensify after seasonal refinery maintenance ends in mid-October, says Gregg Laskowski, a senior petroleum analyst at gasbuddy.com.

“We definitely believe gas will follow a downward trend for the remainder of the calendar year,” Laskowski says. Gas, he says, is likely to fall below $2 a gallon nationally by December.

Gas prices averaging $2 a gallon can already be found in South Carolina, while Alabama, Mississippi, Tennessee and Louisiana hover slightly above that level.

Across the northern Great Plains and Pacific Northwest, the least expensive gas can be in South Dakota, where the average price for a gallon of regular is $2.31. Motorists can expect to pay 30-cents more in Idaho, where most stations are pumping regular at $2.62 a gallon.

The most expensive states are Alaska, at $3.40, California, at $3.31, and Nevada, at $3.11.

Tribune Staff Writer David Murray contributed to this story.