Thursday’s price hike was not as bad as I feared, and it sent me to my records to see that last December, there was also a “discount” from the predicted price. Remember my predictions are based on the trading of gasoline futures in New York, since those quotes are readily available, so we’re seeing some East Coast/Midwest differential again. Meanwhile, I hear up on Alpine, prices are back in the low $1.60’s already. So, looking ahead, wholesale price volatilty continues to make predictions more difficult, but based on what is going on today, taking out this temporary “discount” (figure 6 cents), and seeing Christmas coming at the end of the week, the most likely outcome is a price hike back to $1.79 on Wednesday or Thursday. Let’s book that as my last prediction of 2004, as I’ll be taking a few weeks off from the Gas Game, starting up again on January 11th, 2005. Let’s say 1/4 CORRECT, 3/4 WRONG. Some of the Citgo’s in town raised their price to $1.79, but no one else did. The price hikes came later, on December 30, 2004, and then again on January 6, 2005, to $1.89.
Month: December 2004
I’ve commented before on the change in gas price behavior that seemed to take effect in mid-June of this year. During the first half of 2004, price hikes came weekly, and margins were allowed to get down to about 10 cents before a hike. Since then, we’ve hit the 0-margin price several times, including today, with prices below $1.60. I haven’t adjusted my thinking to this consumer-friendly pricing scheme. Nevertheless, for the third Monday in a row, I’m predicting a price hike this week, and this time I will be right. The new price will be in the neighborhood of $1.81 and could come as soon as this evening. Prices reset to $1.79 on Thursday, so the prediction was CORRECT, although by Thursday, I thought we’d see something more like $1.89.
It has been observed by Patrick DeHaan that the Dept. of Energy report on Wednesday morning has had a major impact on wholesale prices, particularly lately. That is what happened last week, and prices are dropping. As of lunchtime today, Friday’s wholesale prices are holding, which translates to 0-margin retail price of $1.64. So, I predict continued price drops this week to the mid-$1.60’s, followed by a price hike, on Wednesday or Thursday, to around $1.84. The Wednesday DOE report might throw a wrench in that prediction, though. Instead of a price hike, a price war has broken out on Lake Michigan Drive, with prices as low as $1.57 this afternoon. Big WRONG prediction.
The drop in oil and gas prices this week has been amazing. The 0-cent margin price this morning is $1.64, so that’s our target for early next week. So, look for price drops to continue through the weekend. Low price Monday morning was $1.75.