Month: August 2003

Friday, August 22, 2003

In retrospect, yesterday’s price hike seems obvious when you look at what was going on in the futures market. Wholesale prices jumped 6 cents since the last price hike, and retail prices followed. There are indications that we have some serious supply problems right now, and it is not over yet. Yesterday also featured the largest jump in gasoline futures prices in one day in more than 5 years, according to a radio report. The August gasoline futures are out of control, so I am already predicting yet another price hike for next Wednesday, with the new price being an ugly $1.84, just in time for Labor Day. Turning to another matter, the front page of yesterday afternoon’s GR Press featured a rather useless story about “drivers fuming at the pumps.” If you follow my work, you’ll agree that the retailers are not gouging drivers — the problems are at the wholesale level. The retailers’ problem is that they can’t, or won’t, stick with steady margins, instead allowing them to range from 20 cents to below zero. Consequently, when they restore their margins, and as wholesale prices change, you get these 15 to 25 cent jumps, which is just bad public relations for the retail gasoline industry in Grand Rapids. The goal of “The Gas Game” is to catch the retailers when their margins are low. As long as they keep playing, so will I.

The best quote from the Press article was from Tim Sullivan: “We went into Iraq and took over the oil fields and we’ve got nothing to show for it. The prices should be coming down, but they keep going up.” Oh, my, a price hike on MONDAY, with a real ugly price of $1.88. I think I need to stop trying to pick the day and exact price of the price hike, since, in this case, my prediction was WRONG.

Saturday, August 16, 2003

After Thursday’s price hike, my initial guess was that there would not be another price hike this coming week. Then the blackout hit, and in the futures market, although nothing has happened to oil prices, wholesale gasoline prices for August have spiked. Adding to that, news in the GR Press this morning that gasoline from West Michigan is being shipped to Detroit because of the blackout, and you can see that there is a reasonable chance of another price hike in the next 96 hours. That’s not a prediction, though. How about some advice: keep your tanks full just in case. Prices reset to $1.75 on Thursday morning, so I hope you followed by advice.

Tuesday, August 26, 2003

Yesterday’s amazing price hike prompted an e-mail from an old friend in the industry. He reports that the Exxon Mobile refinery at Joliet, IL shut a large gasoline maker over the weekend for unplanned repairs, which added yet more juice to the Chicago wholesale prices. (Based on my calculation, Chicago wholesale prices are now 16 cents ahead of New York — now that’s a Chicago Summer Premium!) Then, my friend reports, last night, wholesale prices fell five cents. Will retail prices follow? We can hope. At the very least, unless we get a Phoenix-style pipeline break, there will not be another price hike through Labor Day. I am cautiously optimistic that prices will fall significantly starting on Labor Day, but we’ll see what happens in the futures markets this week. There was no price hike, and gas prices fell below $1.80 at many areas around time, so the prediction was CORRECT.

Monday, August 11, 2003

Retail prices have dropped as low as $1.56 since jumping to $1.69 last Monday. If you think last Monday’s price hike was a fluke and that there is no Chicago Summer Premium to speak of this summer, then the futures prices say that there will be no price hike this week. However, if you think that the 10-cent premium is back, then there will be a price hike this week, back to $1.69 or higher. As for me, I’m predicting a price hike this week and filling up Tuesday morning. On Thursday morning, prices jumped, with the Marathon in Standale showing $1.69, so the prediction was CORRECT.

Thursday, August 7, 2003

I go out of town for a week, and gas prices go crazy. What are we doing at $1.69 a gallon? Well, it looks like two things happened. One, futures prices shot up somewhat late last week. Second, it seems like the full 10-cent Chicago Summer Premium is back. (Trying to get a handle on the extra money we have to pay for gas in the summer is really a challenge.) I’ll add that today’s Wall Street Journal has an article about a new squeeze in gasoline supplies, because gasoline demand (and it appears, the economy) is picking up in the second half of the summer. This is beginning to look like a bad month for filling up. More on Monday. (c) 2017 Frontier Theme