This is a difficult time of year to make predictions. With the end of September, the federal requirement for reformalated gasoline, to reduce pollution, is no longer in force, so the “Chicago Summer Premium” goes away. This should take 10 cents off of wholesale and retail prices, and I expect the CSP has already been shrinking. Without the CSP, the 0-margin price of gasoline is about $1.32 right now. Mr. Big might decide on a price hike this week, because some stations are selling gas for $1.37 right now, but I just don’t know, since prices are $1.47 in a lot of places, too. So, no prediction this week. Mr. Big ordered the new price to be $1.59 on Thursday. In a classic gas game moment, I was able to fill up at $1.45 at a station that was slow to implement the new price.
Month: September 2003
Retail prices have finally caught up with the huge drops this month in wholesale prices. Excellent! This morning, there are stations asking $1.44 a gallon — a 35-cent drop from 11 days ago! Today I invent a new character: Mr. Big. Mr. Big is the guy who decides when all the stations should raise their prices to the same price. The current wide variety of gas prices right now must be bothering Mr. Big, so I expect he’ll be ordering some sort of hike this week. The new price could be as much as $1.58, but no higher, and probably lower. There’s no better way to be WRONG than to predict a price hike that doesn’t occur. Prices stayed in the $1.40’s through today.
Boy, did I lose the Gas Game this week. Early in the week, I was down to empty, but figuring prices would continue to fall, I only bought 5 gallons, at $1.69 a gallon. Two hours later, the price was $1.66. Today, I’m back to empty, and angry to see that prices reset to $1.79 yesterday. I have no explanation for it. Wholesale prices, as reported by NYMEX, continue to sink, and are the lowest since May, when prices were in the $1.50’s. Did a refinery in Chicago go off-line yesterday? Are the gas stations expecting everyone to drive to the U-of-M/ND game tomorrow? My prediction is that this price hike won’t stick. You will find gas for below $1.60 a week from now, and maybe some brave stations will test a price of $1.50. Now to go buy another 5 gallons. My last entry was a rant, but it was a CORRECT rant. Prices dropped dramatically late last week, and at least one station on Friday listed regular gasoline for $1.49.
The price hike two weeks ago, to $1.88, corresponded with a spike in wholesale/future prices. Since then, those prices have dropped like a rock, but retail prices are taking their time. With the 10-cent Chicago Summer Premium, the 0-cent margin price today is $1.41, and the 20-cent margin is $1.63. Since prices are still above $1.63 everywhere, expect further price drops this week, and no price hike. Very, very WRONG! Prices hiked to $1.79 on Thursday, September 11.
Grand Rapids Gas Prices (see link above) reports prices as low as $1.69 as I write this. That’s quite a drop from $1.88 a week ago. The September and October future prices are a lot friendlier than the August one was, so I see lower prices again this week, and no price hike. Now why is gas still $1.84 in Standale?! There was no price hike last week; the prediction was CORRECT.