What's causing the steep gas price drop in certain Minnesota towns?

Good Question: What’s causing the steep price drop in certain towns?

HASTINGS, Minn. -- Gas prices are thankfully falling. The average price per gallon in Minnesota is about $4.50. But some parts of the state are already well under $4.

What's causing the steep price drop in certain towns? Good Question. Jeff Wagner tries to figure out what's fueling this mystery.

From M&H gas station in Hastings, to the Holiday station across the street, the good vibes are flowing just as fast as the fuel.

On the top ten list of cheapest gas prices in Minnesota, six locations are in or near Hastings -- at a range of $3.68 to $3.88 a gallon. That's up to 70 cents cheaper than the state average.

So what's behind these prices? We spoke with Alfred Marcus, a professor at the University of Minnesota's Carlson School of Management.

"In general, I think you'll find in rural areas, the gasoline is a little bit less expensive than it is in urban areas," Marcus said.

That's because urban areas have higher demand, often leading to higher prices. But that still doesn't explain the huge discrepancy here.

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One of Marcus' theories is Hastings' location, which is short drive from two oil refineries. So why isn't every town near the refineries selling gas under $4?

"There might be, you know, a kind of price war going on," Marcus said.

Competition in Hasting could be fierce. Minnesota law requires retailers to sell gas at least 8 cents more than they bought it -- so making a profit is required.

"They may also want to draw traffic from other stations," Marcus said.

The allure of saving on gas is enough to make drivers burn it. Speculation aside, we went straight to the source for the secret behind the pricing. Unfortunately, the owners of the gas stations said they were not allowed to comment.

Other Minnesota cities where gas prices have dipped below $4 include Buffalo, St. Cloud and Vermillion.

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