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Minnesota consumers and retailers feel pain from gas price spike

Minnesota retailers who target low- and moderate-income residents will undoubtedly see the effects of the price surge.

The Super America station at Snelling and Portland Avenues in St. Paul was selling unleaded gas for $4.25/gallon on Monday.
MinnPost photo by Corey Anderson

Just when Minnesotans thought it was safe to come out of their winter hibernation, they’ve been slapped with gas prices that quickly burst through the $4 a gallon mark.

While it is an aggravation for many people with good-paying jobs, it is the latest action that crushes Minnesota’s working poor.

Minnesota retailers and grocery stores who target their sales to low- and moderate-income residents will undoubtedly see the effects of the gas price surge.

People need gas to get to work, so they are stuck shelling out extra cash at the pump. But when many Minnesotans drop by their local Wal-Mart or Cub or Rainbow, they’ll bypass some items that they now view as discretionary because they simply can’t afford them.

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As gas-price anger was building in Minnesota last week, Wal-Mart released its quarterly results that showed the U.S. economic recovery is still a work in progress.

Wal-Mart sales decline

Comparable store sales at Wal-Marts declined 1.4 percent in the United States for the quarter that ended April 26.

In announcing its results, Wal-Mart said: “Comp sales performance was impacted by a delay in income tax refund checks, challenging weather conditions, less grocery inflation than expected and the payroll tax increase.”

When the payroll tax was raised by 2 percent in January, it meant smaller paychecks for Americans.

That action translated into less money for Americans to make essential and discretionary purchases, and Wal-Mart acknowledges that it has had an effect on its first quarter sales.

Now, Minnesota consumers are paying dramatically more than they expected to fill up their gas tanks, so retailers will see another wave of consumer retrenchment in their stores.

On Monday, according to the AAA Daily Fuel Gauge Report, Minnesotans were paying an average of $4.28 a gallon for regular unleaded. That’s more than 60 cents higher than the $3.65 a gallon that’s the current national average.

In the last few days, we’ve learned that Minnesotans are bearing the brunt of high gas prices because multiple oil refineries are simultaneously doing maintenance.

Seeking review

U.S. Sen. Amy Klobuchar, D-Minn., has asked the Department of Energy to review “the closures and the timing of maintenance operations and take action to prevent future supply problems that cause consumers pain at the pump.”

Only a month ago, Minnesotans were paying about $3.44 for a gallon of unleaded, so it’s not surprising that current prices are making people’s heads spin.

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Who knows whether the federal government will attempt to regulate oil refinery maintenance schedules?

But in the coming days and weeks, many Minnesotans will be forced to economize.   

That means forgetting about non-essential retail purchases. It means scrimping on choices in the grocery store aisles.

When Minnesota retailers analyze their second quarter results, they’ll be talking about more than May snow and a late spring. They’ll notice a bite in sales linked to the shocking run-up in gas prices.

Fedor can be reached at lfedor@minnpost.com. She is on Twitter @LizFedor.