Tricky Thursday

Wednesday, February 25, 2015, 9:00PM:  Wholesale prices jumped up 10 cents a gallon today.  I don’t know why, but that pushes us back into price-hike territory.  Don’t be surprised to see $2.49 on Thursday. –Ed A.

Posted in Predictions

Stupid Saturday

Saturday, February 21, 2015, 8:30PM:  Darn it!  I updated my spreadsheet this morning and saw that we have moved into price hike territory.  But it’s the weekend, so I thought I could wait until Sunday to predict a price hike.  WRONG!  We saw a rare Saturday hike today to $2.39, and I lost the Gas Game.  We’ll get you next time, Big Red! — Ed A.

Posted in Predictions

Back to Normal

Comment on the January 31 prediction:  We saw price hikes on February 3 and February 10, up to $2.35 and then $2.39 in Michigan. I was CORRECT on the first one, and I should have predicted the second one, so add one to the WRONG score.

Wednesday, February 11, 2015, 9:30AM:  Yesterday’s price hike confirms that we are back our usual game rules.  Since I haven’t done so in a while, let me explain the calculations.  We start with an estimate of the wholesale price set in an electronic market.  Thanks to my Gas Game colleague Bill, we have several places on the Internet to hunt around for daily reports like this one.  The Chicago CBOB price at the end of the day Monday was $1.58.  We also have to take ethanol prices into account, which you can find many places online, and a recent quote is $1.41.  With a 90% gasoline/10% ethanol mix, we do the same with the prices, add 18.4 cents for the federal gas tax and 15 cents for a variety of profits taken by various businesses on the way to the retailer, then add in sales tax (still 6% in Michigan) and the state gas tax (still about 19 cents a gallon).  As of Tuesday morning, that gets us to a 0-margin price of $2.23.  (The biggest fudge factor in there is the 15 cents, which I adjust from time-to-time as retailers report to me on what they are paying to fill their underground tanks.)  If the retail price is near the 0-margin price, then a price hike is close by, usually 15- to 20-cents above that 0-margin price.  As I had gas prices in Standale at $2.19 on Tuesday morning, we got the hike to $2.39.  (I was hoping they would wait an extra day, and I didn’t make time on Monday night or Tuesday morning to post.)  So, that’s how it works. -EA

Posted in Commentary, Predictions

Looks Like the Party is Over

Comment on the January 1 prediction:  Prices rose the next day as predicted, although not as high in Michigan as I thought.  A week later, they rose again.  Pretty much CORRECT.

Saturday, January 31, 2015, 10:15AM:  Wow, oil spiked higher on Friday, so wholesale prices followed, and we are already back in price hike territory.  Looks like the Cheap Gas Party of Winter 2015 is over, as I have been expecting.  Don’t be surprised to see a price hike over the next few days.  $2.39? — Ed A.

Posted in Predictions

After the Energy Crash of 2014

Comment on the January 1 prediction:  We got the hike to $2.09, but it didn’t come until Monday the 5th.  That’s close enough for me, so I’m scoring it CORRECT.

Wednesday, January 21, 2015, 8:00PM:  Sorry for the silence the past three weeks.  I’m having a hard time making sense of the numbers after the Energy Crash of 2014, although my stance right now is that prices are going to start rising as they usually do the first four months of the year.  Right now, January 13 looks like the day of the low for energy (oil closed at $45.89 a barrel), and we got just enough of a jump in wholesale gas prices today that, combined with recent retail drops, puts us in the price hike zone.  I am going to plan on a hike to the $2.09-$2.19 range in the next few days, maybe as soon as tomorrow.

I think what has contributed to the Crash was some traders or funds blowing up and having to sell their energy future contracts.  As an example of a currency trading firm that was wiped out earlier this month: glad I didn’t own stock in FXCM. –EA

Posted in Commentary, Predictions

New Year! New Game?

Comment on the December 17, 2014 prediction:  No hike the last two weeks of December, so the prediction was WRONG.

Thursday, January 1, 2015, 1:30PM:  Happy New Year to all our readers!  I appreciate that you come to read about gas prices, and I hope we can continue to help you save money during 2015.  Wow, on November 24, retail gas prices were $2.99 in Standale.  Today, it is $1.84, and $1.68 in Lowell.  Reports are that we have some of the cheapest gas in all of the U.S.  It has been remarkable.  What can we expect going forward?  I have to bow to history and expect to see prices move up over the next few months, as they usually do during the winter.  And we are due for a price hike, because drops in retail prices are finally catching up with drops in wholesale prices.  If the pre-price crash rules hold, we’ll see a jump soon to about $2.09 a gallon.  Friday? — Ed A.

Posted in Commentary, Predictions

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