If there is a silver lining in yesterday’s price hike, the $1.79 price is at the 20-cent margin rather than a 25-cent margin. But that tells you that futures keep climbing. And between yesterday and today, they are up another two cents. It is too early to say what is going to happen next week, but don’t be surprised by another price hike, above $1.79. I’ll update on Tuesday.
Month: February 2004
Last Thursday, we saw the another situation where many stations, led by Speedway, raised their prices to $1.76, while others only went up to $1.69. In fact, as of yesterday, prices were back below $1.70 on Lake Michigan Drive. So what’s going on here? When I started studying the situation a few years ago, I used some algebra to conclude that the purpose of a price hike was to get the gas stations’ margins back to 20 cents. My theory is that some stations figure it is about time to get that margin up to 25 cents, but some competitors aren’t going along. So, I expect this tug of war will continue for a while until either the 25-cent margin sticks, or Speedway and friends give up. As for this week, future prices took another jump on Friday, making the 20-cent margin price $1.75. So, the ingredients are there to raise prices to as much as $1.80 on Thursday. That’s my prediction. And, if it happens, then you’ll understandably start hearing the howls in the GR Press. That prediction was CORRECT, as prices rose to $1.79. Then, in a rush on Tuesday, I posted a prediction on GrandRapidsGasPrices.com that there would be no price hike during the last week of February. That was dead WRONG as prices rose (again) to $1.79 on February 26, and I am stuck with less than half a tank.
Quite a wide range of prices right now in Grand Rapids. Unfortunately, the futures turned up sharply today, and I now predict that Speedway and friends will see that and reset prices either Wednesday or Thursday, to about $1.70. For some places, that won’t be much of jump. For others, a bigger jump. Yes, the price hike came on Thursday, to $1.76 at most places, $1.69 in others. I’d say I was mostly CORRECT.
On Monday, the price of oil spiked temporarily to $35 a barrel. This morning, it is back to $33. Looks like Mr. Big at Speedway either panicked or got greedy, but first thing Tuesday, the price of gallon of gas was $1.76. This price hike isn’t holding, and already you can get a gallon of gas for $1.66 around town. I predict the price will continue dropping through Valentine’s Day … unless it drops too much too soon, and then they’ll raise prices on Feb. 12 or so. I’ll keep monitoring prices and report again next week. For now, I’m driving on a quarter tank. That prediction was recinded by the next entry.
Arrgh — lost the Gas Game this week. When I saw gas yesterday afternoon for $1.53 at Fuller and Leonard, I knew then that a price hike was coming, but I didn’t fill up because I thought it would be on Thursday. As noted, it is already posted on the Speedway web site — $1.76!!! The 20-cent margin price, based on yesterday’s futures prices, is $1.74, so it is starting to look like Speedway is trying to improve their margins. Let’s see how other stations follow their lead.