Minnesotans face the 'insanity' of gas at nearly $5 per gallon

HINCKLEY, Minn. — Doug Holman pulled up to the pumps at Tobies and spent $260 to fill up his Ford pickup and the speedboat he was hauling to Lutsen, Minn., for his family's annual July 4th getaway.

"In total, this trip is going to cost me more than $1,000 for gas," Holman said. On the same trip a year ago, he paid $450.

This won't be the last time Holman takes out the boat in 2022, but the Edina construction company owner said he won't be going out every week like he did last year. Gas, now priced at nearly $5 per gallon, is too expensive.

Holman is one of many Minnesotans who have been forced by record gas price to cut back on their travel. People across the country are retrenching as gasoline tops levels not seen since 2008, when prices hung stubbornly above $4 a gallon before crashing with the economy later that year.

Economists partly blame the current spike on the decision by many countries to ban Russian energy imports because of Moscow's invasion of Ukraine, which drove up global oil and natural gas prices. But even before the war, U.S. prices were being shaped by rising consumer demand and a squeeze caused by maintenance-related refinery shutdowns.

Although demand has dipped because of the soaring prices, the decline has been modest compared with the nearly 30% drop at the start of the pandemic in 2020.

"There are a lot more people traveling by choice this year," said Patrick De Haan, head of petroleum analysis at Gas Buddy, which tracks fuel prices across the U.S.

But people aren't traveling as much as they'd like. According to recent survey commissioned by the American Hotel and Lodging Association, 57% of Americans plan to take fewer leisure trips this summer because of gas prices, while 33% are cancelling trips. Altogether, 82% of respondents said fuel prices will have some impact on where they go.

Connor and Taylor Goodwin of Austin, Minn., decided to take their young daughter to Duluth this week instead of 560 miles west into South Dakota. The switch should save them about $200.

"Northern Minnesota is beautiful, too, but we usually go to South Dakota at this time of year," Connor Goodwin said as he and his family ate cinnamon rolls in the parking lot of Tobies in Hinckley. "It's hard to go out of state when gas prices are this high."

Chris Hickle, co-owner of Tobies, said high gas prices are probably responsible for an overall sales decline of 5% this year. One of the most popular truck stops in Minnesota, Tobies draws thousands of Interstate 35 travelers daily because of its baked goods and adjoining restaurant.

In interviews with more than 40 motorists at the truck stop and in the Twin Cities area this week, most said they were cutting back other expenses so they could afford to travel. Some were carpooling more or combining trips. Others were going out less to restaurants and movie theaters.

Julie Hernandez-Corado, who lives in rural Sandstone, Minn., said her two grandchildren have been virtually trapped at her home most of the summer because their friends live at least 45 minutes away. Despite economizing, she still spends $300 to $500 on gas weekly to buy groceries and make other necessary trips.

"I have to travel a lot to get anywhere," Hernandez-Corado said. "Walmart is 45 minutes away. It's 70 miles for a hair appointment."

She said she now spends more on gas than on her mortgage.

"It's insanity," she said as she filled her GMC Yukon at Tobies. "We're having no fun because you have to pay your bills."

Mark Bergen, an economist at the University of Minnesota who studies pricing issues, said rural residents are among those hardest hit by gas prices because they tend to travel longer distances and don't have access to mass transit.

Bergen said that if gas prices stay high, families will make more significant changes, such as switching to more fuel-efficient vehicles, moving closer to mass transit and even changing jobs to cut down on commutes.

"Six to 12 months from now, you will see people make bigger structural changes to reduce their exposure to gas prices," he said. "Now, we're more in the limited reaction stage."

Lauren Olson, whose family stopped at Tobies on their way from Eagan to Duluth, said her Jeep Cherokee gets about 15 miles per gallon and high gas prices made her realize it's time to get rid of it.

"We've been thinking about an electric vehicle for a while, and this sealed the deal," said Olson, whose family has dropped plans to visit Yellowstone or Glacier National Park this year.

At Costco in Eden Prairie, where long lines for discounted gas have caused traffic jams on nearby streets this summer, Mohamed Ahmad waited almost 15 minutes to fill up his Mitsubishi Lancer. He said he has parked his Volkswagen at home for the past three months, cutting his weekly fuel bill from $150 to $60 or $70.

"It's a big inconvenience," Ahmad said.

Abdirahman Abdul said he is working an extra three to four hours a week as an Uber driver to help cover higher gas prices.

"We're cutting back on absolutely everything," Abdul said. Among the family's cutbacks: His six children have yet to see the most recent "Doctor Strange" movie, which came out in early June.

Federal officials project gas prices to drop to around $4.27 a gallon by fall. Oil prices are down more than 10% from the peak reached three weeks ago. Refinery utilization rates are climbing, but capacity remains 6% lower than before the pandemic.

Gas Buddy's De Haan said most motorists could cut gas expense by 10 to 20% by driving more fuel efficiently. He said he recently squeezed an extra 125 miles out of a tank of gas by slowing from 75 mph to 55 mph on the freeway and taking other steps to reduce consumption.

"People give up on their plans rather than figure out how to drive more fuel efficiently," De Haan said. "It's the one thing Americans completely overlook."