With approximately 1,500 residents (2000), Egilsstair is the administrative and transportation centre of the eastern part of Iceland. The ring road around Iceland passes through the town, and the distance from Egilsstair to ReykjavÝk via the southern or the northern stretch of highway one is practically the same.
Egilsstair is located in the Fljˇtsdalur district, on the eastern end of Lagarfljˇt. There are many stories about "kynjaskepnur", that is, strange animals or unknown phenomena, in Lagarfljˇt. One of these stories concerns the Lagarfljˇt Worm, or "Lagarfljˇtsormur", that is thought to live in the river and show itself only very rarely. The legend of the worm is first mentioned in the Icelandic Annals of 1345. When his hump surfaced out of the river, it was thought to bode great news. More recently, gasses that are forced up out of the water have been discovered in two places and it is thought that this may offer an explanation of the Lagarfljˇt Worm.
At the southern end of Lagarfljˇt lies Hallormsstaarskˇgur, the largest forest in Iceland. A forestry station was established there in 1903, where trees are cultivated and experiments with foreign varieties of trees are carried out.
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