Let’s Play Pretend?

Tuesday, April 15, 2014, 9:00PM:  Despite the fact that ethanol prices are back under control, Monday’s price hike had the same flavor as other recent hikes.  That means that the price to retailers still has an ethanol premium included, or those red colored stations are pricing gas pretending that ethanol is still a problem and hoping we just live with it.  A clue that it may be the latter was the curious behavior in prices along Lake Michigan Drive the past two days.  While prices in Grand Rapids were popping to $3.89 everywhere, the Family Fare at Collindale held in the low $3.60′s, and Speedway was forced to follow.  Tuesday morning, they still had those prices, as did the Marathon down the road in Standale.  GoLo there was at $3.79, though, and at 3PM today as I drove by, Speedway and Marathon decided to try $3.85.  They’ll be back to at $3.79 or lower tomorrow, and we see this sort of behavior when there is a lot of room for prices to move, as I think there is right now.  I am calculating a price to retailers of about $3.54 right now.  The easy prediction recently has been “expect another hike”, although my math models don’t quite say that.  In these times, we sit back and watch. — Ed A.

Posted in Commentary, Predictions

Because Ethanol!

Comment on the March 26 prediction:  So much for the WRONG “easy prediction”, as we saw another Saturday hike, to $3.85.

Friday, April 4, 2014, 8:15AM:  We have a great group of commenters on our site right now, and they have pointed the way to understanding what has been going on with these price hikes lately.  As you may have heard on the news, March saw a shortage of ethanol (related to problems in rail service!), and a spike in ethanol prices.  Since most retail gas these days is at least 10% ethanol, depending on where you live, this has impacted prices, and it is also messed up my calculations.  I have never factored fluctuations in the price of ethanol into my spreadsheet, but I will start doing so when I do my annual spreadsheet upgrade in May.

So, what happens this weekend?  Ignoring the ethanol issue, prices could fall to $3.50 in Michigan, and we are in the mid $3.60′s right now.  If we had the kind of ethanol shortages we had in March, then a hike back to $3.85 is likely in the next few days.

I just don’t know, so the safe thing to do is to fill up for $3.65 or less today. — Ed A.

Posted in Commentary, Predictions

Scratching My Head

Comment on the March 19 prediction:  With the price hike on Saturday to $3.79, this one turned out to be WRONG.

Wednesday, March 26, 2014, 7:15AM:  I am still scratching my head about Saturday’s price re-set to $3.79.  Here was my calculation on Saturday morning:  estimated wholesale price:  $2.71.  Add in taxes and transportation, and the price to retailers was $3.39.  Typically, when a price hike occurs, the new price is about 20 cents higher than that, which gives us $3.59.  Now, retail prices on Friday night were about $3.59, so I would expect no hike.  Instead, $3.79 was 40 cents higher than the price to retailers.  That’s just weird.  Now, this morning, you can buy gas for $3.59 at the Marathon at Burton and Kalamazoo, but there are still a lot of places in the upper $3.70′s.  Unless we have just seen a dramatic change in retail gas pricing behavior, it is an easy prediction that gas prices will continue to fall for the next several days. –EA

Posted in Predictions

No Hike Thursday

Wednesday, March 19, 2014, 6:15PM:  Nice drop today in wholesale prices, so we should see some relief at the pumps through the weekend (unless wholesale prices jump back up on Thursday).  I’ll predict lower prices at least until Monday.  –Ed A.

Posted in Predictions

We Can Hope For A Quiet Spring in Terms of Gas Prices

Comment on the February 26 prediction:  It was absolutely CORRECT, as prices rose the next day to $3.75.  I’ve missed the past two prices hikes, though (3/5 and 3/12).

Sunday, March 16, 2004, 3:30PM:  Let’s step back and look at the past several months.  Retail gas prices have gone from $3.79 at the end of August to $3.03 (in Standale) at the beginning of December, and now in mid-March, we are back to $3.79.  This has been pretty typical price behavior for the autumn and winter, although the weekly jumps since the beginning of February have been a bit harsh.  What’s next?  In 2012 and 2013, prices topped out in March and then stayed stable for a few months, and in the past two weeks, wholesale gas (and oil) prices have calmed.  So, let’s hope we’ll stay below $4 a gallon at least until the summer.  But let’s not call that a prediction. — Ed A.

Posted in Commentary, Predictions

Why hike Saturday when Thursday will do?

Wednesday, February 26, 2014, 6:30PM:  Although I am still perplexed about what happened last week, I have some clarity about what will happen tomorrow.  Last Thursday, on Grand Rapids Gas Buddy, there were postings of several stations at a new price of $3.65.   Then, a few hours later, those postings were gone.  Instead, on Saturday morning, we got our third Saturday hike in a row, and of course the new price was … $3.65.  Retail prices have been following higher wholesale prices, which we usually see in February, particularly in regions influenced by Chicago.  Well, we have a new high for 2014 in wholesale prices tonight, and I calculate the cost to retailers to be $3.59 a gallon.  Since prices in and near Grand Rapids are in the $3.44-$3.65 range, we are looking at price hike on Thursday.  Estimated new price:  $3.75. –Ed A.

Posted in Predictions
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