(The following was posted yesterday at the grandrapidsgasprices.com site. I thought I knew how to update this web page from home, but I couldn’t.) Seems that Speedway is trying everything it can to improve its profit margin. Earlier this year, it appeared to me that it was trying to increase the profit per gallon from 20 cents to 25 cents, but the competition didn’t buy into it. Also, if you go back to the beginning of 2004, you see that the stations have been a lot quicker to “restore their prices”, with the profit per gallon getting down to about 10 cents before there is a price hike. That’s why we are getting one every week.Tuesday’s price hike to $1.89 … a lot of Speedway’s competitors didn’t match it, and the Speedway at Michigan and Fuller is back at $1.79. There was no corresponding price hike in Chicago, either.Now, this is what worries me … wholesale prices are up 6 cents since Friday. With my usual calculations, that would mean, if there is a price hike, the new price would be $1.94. I’m going to go out on a limb and predict that they raise prices again tomorrow (Thursday) to $1.94, and the competitors will follow. WRONG-O. Prices have got down to $1.74 in Grand Rapids as of Monday morning.
Month: April 2004
Looks like new highs for wholesale prices again today, which would lead to a fresh price hike to $1.91. I don’t think it will be tomorrow, though, as prices in Standale are $1.87 right now. I’ll update on Wednesday. WRONG? Speedway raised its prices on Tuesday to $1.89. Some other stations followed, but others didn’t.
The volatility continues — wholesale prices are 5 cents lower than they were on Monday, translating to a 20-cent margin price of $1.83. I still think we see a price hike by Thursday, but not as high as I thought in my previous posting. On Monday, I had the price right ($1.89) and the day wrong, and on Wednesday, I had the date right (Thursday) and the price wrong, so I grade myself 75% CORRECT, 25% WRONG.
If I were asked about what was going on with gas prices, I would say that wholesale prices have gone up, and also that retailers have gotten a lot more aggressive about passing these price hikes along to the consumer. For an example of this, I take this morning’s wholesale prices in New York: $1.178 for the May contract, $1.176 for June. This averages to $1.177. Now add in 40 cents for gas taxes, storage fees, and the like, and that gives us about $1.58. Now add in 20 cents profit for the gas station, so now we are at $1.78. Finally, there’s the 6% sales tax, and that gives us $1.89. Go to grandrapidsgasprices.com, and see that the lowest price at the moment is $1.73 at Admiral on 32nd and Division. That would be a price hike of 16 cents, which is typical, so expect to see $1.89 soon (Tuesday?). I will update on Wednesday. As of Wednesday morning, no price hike.
From the end of the day on Monday to the end of the day on Thursday, wholesale prices rose 14 cents! No wonder they hiked prices on Thursday. I need to change my approach here — in the past, using Monday’s prices was good enough to make a prediction for the week, but not lately. So, first I’ll be taking next week off due to heavy commitments at work, and then I’m going to start posting twice a week — on Monday and Wednesday afternoons — because that’s what needs to be done right now.
The theme this week will be “watch those prices fall”. Wholesale prices plunged last week, and the 20-cent margin price is about $1.75 right now, which is below some retail prices at the moment. Unless oil prices spike up again this week, we’ll probably see prices somewhere in town below $1.60 a week from today. Oil prices spiked up again this week, so technically I weasled out of that prediction. Oh, let’s just say WRONG, as on Thursday, April 8, there was a price hike to $1.79. In some cases, the price rose from $1.76 to $1.79.