Gas Game Class Is In Session

Comment on the April 18 posting: CORRECT, as prices rose to $2.95 the next day, as predicted.

Sunday, May 6, 2018, 9:00PM: As we bump up against $3 gasoline, let’s review how our calculations work. It starts with RBOB = reformulated gasoline blendstock for oxygenate blending, in other words, the unleaded gas that we buy at the station. The wholesale price for RBOB is set via trading on markets in places like New York and Chicago. In my spreadsheet, I start with the end-of-day RBOB quote that I can find online.

Actually, RBOB makes up 90% of what you get at the pump. The other 10% is ethanol, which is cheaper than RBOB, so I have a spreadsheet calculation like 0.9*RBOB + 0.1*Ethanol. Next is to add on Federal gas tax of 18.4 cents per gallon and about 18 cents to take into account transportation, middlemen, etc. Then, we tack on 6% sales tax, and in Michigan, 26.3 cents per gallon of gasoline tax (to *eventually* fix the roads). Friday’s RBOB quote of $2.12 converts to an estimated cost to gas stations of $2.83. So, if the price is near $2.83, it is time to predict a price hike. Hikes tend to tack on 10-25 cents to that cost that I calculate.

This evening, prices in Grand Rapids vary from $2.68 to $2.95, so we are wandering back into price hike territory again. I imagine the debate in gasoline headquarters is to under-hike back to $2.99, or do a standard hike which would take them to $3.09. Whatever they decide, I’m sure we’ll see a reset this week, probably on Tuesday, so I am going to fill up on Monday morning — $2.70’s on Alpine Ave! -EA

Not Quite Three Yet

Comment on the April 9 posting: Prices rose on April 11 to $2.85. CORRECT!

Wednesday, April 18, 2018, 7:00PM: Oil prices keep dancing higher, closing tonight over $68 a barrel, the highest in two years. So, wholesale gas prices follow, and we are back in price hike territory. A price reset to $2.99 would get margins back to where they usually are after a hike, but I wonder if they’ll do something like $2.95 to be less dramatic and keep the media away. Should I start practicing typing $3+ for May? -EA

It’s One of Those Weeks

Comment on the March 28 posting: Prices rose to just $2.83, and on Saturday, as Big Red was trolling me. Have to mark that one as WRONG.

Monday, April 9, 2018, 8:00PM: Wholesale prices out of Chicago are up again, and we are back in price hike territory. Since this is only Monday, I’m sure we are going to see a hike this week, maybe as soon as Tuesday. At least back to $2.83, but probably higher. Fill up! -EA

Out Like A Lion?

Wednesday, March 28, 2018, 8:00PM: Prices are rising in parts of Indiana right now, to $2.79. Although we aren’t quite in “price hike range” in Michigan, they have been aggressive recently, so I think we’ve got a better than 50/50 chance of a hike to $2.89 on Thursday or Friday. I’m going to fill up on Thursday, just in case. -EA

You Snooze, You Lose

Comment on the March 6 prediction: CORRECT, as prices rose to $2.69. But, I didn’t get around on Friday to post a prediction on yesterday’s hike.

Sunday, March 18, 2018, 10:0AM: Here’s my story from yesterday. When I updated my spreadsheet on Thursday night, the numbers from Chicago were up “due to futures expiration and rollover”, but I thought the quote might have had a typo. I waited until Saturday morning to get the Friday quote, and I saw the jump in wholesale prices was not a typo, but since it was early Saturday, I figured we were set until Monday. In fact, I set a reminder to write a Gas Game prediction on Sunday morning. But, then $2.69’s started appearing on the Speedway site by 11AM on Saturday, and soon after, Gasbuddy sent out a notification via their app. Later in the day, I was driving through Lowell and saw that the old Admirals were still at $2.41, even though the rest of the stations were at $2.69, but I didn’t have time to stop and top off the tank. So, thanks, Big Red, for not waiting until Monday.

Looking back, since last July, oil has been slowly-but-surely moving up from $45 a barrel to $60, while the move in the gas has been more muted, from the $2.40’s when it spikes to $2.69. I think we’ve actually had a break on gas prices, given what has been happening in oil. I’m still wondering if $3 a gallon is to be expected this spring. -EA

Creeping Higher

Comment on the February 19 prediction: Prices rose as predicted. CORRECT!

Tuesday, March 6, 2018, 3:00PM: Oil and gas wholesale prices have been creeping higher for the past few weeks, and we are heading back into price-hike territory. I am filling up tomorrow morning, planning to find gas below $2.40, before we see a hike this week, back to $2.65 or higher. ‘Nuff said!  -EA (c) 2017 Frontier Theme