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Why are gas prices dropping? (Not complaining, just asking)

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The Associated Press reported that gas prices on Monday hit their lowest point of the year. The nationwide average is now $3.28 a gallon, 12 cents lower than a month ago and 26 cents less than this time last year.

Here's a case where it's good to be below average. At noon Monday, there were four gas stations in the metro area selling gasoline for under $3 a gallon. According to, the average cost per gallon in the Twin Cities is $3.17, down 17 cents from one month ago and 11 cents from the same date in 2012.

Quite a relief from the pain at the pump last May, when prices in Minnesota topped $4.30 a gallon and pushed the budget of many motorists onto empty.

What makes the cost of fuel bounce around like a bunch of junk in the back of a pickup?

KSTP recently interviewed John Flemy, chief economist at the American Petroleum Institute. He said current oil production is at a 10-year high. He thinks price is tied to weather, demand and three factors that he calls, "China, China, China."

Time Magazine reminds readers that last year at this time, prices at the pump were rising, due, in part, to the disruptive hurricane. The report quoted the AAA Fuel Gauge Report, which suggests prices will keep inching downward, barring refinery problems or higher costs related to turmoil in the Mideast.

Yahoo! Finance adds that the partial government shutdown may have pushed down prices because slower economic activity depresses energy demand--and prices.

Last month, an AP energy writer found another reason for the price decline: refiners switch to cheaper blends in the colder months as clean-air rules are relaxed.

Enough to make a fall road trip sound downright affordable!

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