Have gas prices bottomed out?

COEUR d'ALENE — Local gas prices continue to drop toward the $1.50 mark at some stations, and AAA doesn't believe they've quite bottomed out.

The average for a gallon of regular was $1.65 in Coeur d'Alene on Friday — 30 cents less than a month ago, according to AAA. Multiple local stations were at $1.54 on idahogasprices.com.

"I believe Idaho gas prices may drop another nickel or so, but prices typically inch up starting now as refineries clear their inventories of winter-grade fuel and prepare for the summer travel season," said Dave Carlson, AAA spokesman. "Tighter inventories of winter-grade gas nearly always result in higher spring gas prices.

"But AAA is the first to say we don’t have much experience with prices this low to be able to accurately determine how low prices will go."

Carlson said gas prices are low because oil prices are low. Oil is trading near $29 a barrel compared to $53 a year ago.

One local situation that's gotten a lot of attention during the low prices is the spread between stations in Coeur d'Alene and Post Falls just 5 miles apart. Post Falls stations have historically fetched a nickel or a dime more than Coeur d'Alene but that spread was 18 cents on Friday when Post Falls' average was at $1.83.

The spread has been as high as 35 cents when considering the difference between the cheapest stations in Coeur d'Alene and the most-expensive ones in Post Falls.

When explaining the price spread, Carlson said free and competitive markets allow retailers to set prices they deem right for themselves.

"Post Falls retailers probably would like some people to stop at their stations without going to Coeur d'Alene," he said.

Post Falls' closer proximity to Spokane, which typically has higher prices than in North Idaho due to Washington's higher gas tax, may be another factor.

"Retailers in Post Falls may look to get the most return on their investment without giving away the store," Carlson said.

The phenomenon of

widely varying gas prices seems to get more attention when prices are on the downward spiral, Carlson said.

"Lower prices signal the marketplace is at work in a couple of ways," he said. "Aggressive retailers are interested in attracting buyers when the prices they pay are coming down and demand is low. They can get appreciative customers inside their stores to buy gas and other merchandise.

"These retailers sell more gas at a time when their replacement costs are going down. Those that don’t lower their prices are not likely paying more for their fuel, unless they’re buying it from another source. Those retailers who are not dropping their pump prices may still have existing inventories that cost them too much to give away."

Carlson said there’s no single behavior, action or explanation that works all the time — or even makes sense most of the time — when explaining price spreads in the same area.

Messages left on Friday morning to two local fuel suppliers to get their explanation on the spread were not returned.

Carlson said Coeur d’Alene prices are low, but there are other places in Idaho, such as Rexburg, where the local retailers are dropping prices to compete with each other and to buy some of the affection from their customers.

"When rack prices are low, it makes sense to drop prices, especially if you own a convenience store with products and merchandise you’d like to sell," he said.