By my calculations, retailers are currently breaking even by selling gas for $1.41 a gallon. This includes the 10-cent summer premium. So, I don’t understand how, on the south side of town, gas prices are $1.35 or so right now. Given that, and with the a big 3-day weekend coming up, we have a nasty price hike coming, probably Tuesday morning, and probably to $1.63 or so. This prediction wasn’t worth getting credit for. There was a price hike on Tuesday, to $1.58 or so. It seems that lately, the 10-cent summer premium is just a nickle.
Month: June 2003
Since peaking on June 11, wholesale gasoline prices have been drifting lower, and so have retail prices. With the 10-cent summer premium added in, the 0-cent margin price is $1.43, and the 20-cent margin price is $1.64. This morning, gas is selling for as low as $1.46. It seems clear that a price hike is coming this week. I haven’t any insight into whether it will be on Tuesday, Wednesday, or Thursday, but the new price will be about $1.63. I am astonished that there was no price hike, with prices getting as low as $1.35 on Monday the 30th. Color me WRONG!
Futures peaked last Wednesday, then dropped signifcantly the rest of the week. That puts the 0-cent margin right now at $1.47. Since we aren’t even close to that price, I don’t see a price hike this week. There was no price hike; the prediction was CORRECT.
Futures did jump again on Friday, so it is time to re-evaluate. On June 1, retailers had to be selling the reformulated gas. Refiners had to start making it on May 1. In retrospect, this was adding 4 cents a gallon during May, and now 10 cents a gallon. This is the “Chicago Summer Premimum”. So, in my calculations, I am back to using the 20-cent maximum margin for retailers and, through the end of September, a 10-cent add-on for the summer. That would make the 20-cent margin price today $1.68, and the 0-cent margin price $1.47. Prices are in the $1.55-$1.60 range today, so there isn’t an obvious prediction, but I’ll make one regardless: price hike on Wednesday or Thursday to $1.69. Thursday morning, prices jumped to $1.68, so the prediction was CORRECT. Although I was at work, I saw the price hike at the Speedway web site (see link above).
Trying to make sense of this week’s price hike to $1.67, my guess is that the Chicago Summer Premium, which starts to appear in May, really kicks in come June. Looking at 2002 daily numbers seems to bear that out. I am gathering more information about this for my next post. For now, the only way we get a third price hike next week is if futures prices jump again tomorrow.