Readers of my postings know I have argued strongly against the idea that large gasoline retailers use low prices to drive out competition. My primary example has been Speedway, a large gasoline retailer, who typical takes the lead on price hike days. So, the report in this weekend’s GR Press about the gas price war in Fremont caught my attention. According to this report, Wal-Mart was selling gas this past Friday at $1.64 a gallon (compare to $2.03 in Grand Rapids), definitely below cost, and the other retailers in town, including Speedway, have had to compete. Also, it seems that the past few price hikes in Grand Rapids have not been matched by all retailers, leading to significant price differences in town. I am beginning to suspect that the next several weeks will be volatile (both up and down) when it comes to gas prices. As for this week, I can buy gas in Standale for $1.91 and CNBC has oil prices up more than a buck this morning. This means wholesale gas prices will be up 3 to 5 cents today, leading to a 20-cent margin price of about $2.07, and I predict that will be the new price on Thursday (plus or minus a few cents, and maybe Wednesday, but never Friday). $2.07 was the new price on Wednesday in most places, Thursday for some — CORRECT!
Month: February 2005
Pretty peculiar out there right now — in many parts of town, prices are in the $1.93 to $1.99 range, following up the price hike last week. In other parts, there didn’t seem to be a price hike, and prices are in the low $1.80’s. Wholesale prices are odd, too. I usually average the current month and following month prices from NYMEX, and this morning the March futures are $1.28 while the April futures are 10 cents higher, which is quite unusual. Put it all together, and, well, if I was Speedway, I’d reset all my stations to $1.99 again this week. That’s not a prediction for now, though, but keep your eyes open for rapid changes. Like I said, it wasn’t an official prediction, but it was accurate, as prices went up to $2.03 on Thursday. They were back to $1.96 a lot of places by Saturday, though.
Wholesale prices haven’t changed too much, so that’s not a factor. I am going to appeal to one of my original rules — when gas prices stop going down, expect a price hike soon. Prices seem stuck at $1.85 or so in Standale. The price tomorrow, I predict, will around $1.96. Prices went up to $1.99 in town last Thursday, so the prediction was CORRECT, except, of course, for the places, such as the NE side of Grand Rapids, where prices really didn’t go up.
Wholesale and retail prices have dropped 10 cents since last Tuesday, so we are back where we were a week ago. Retail prices should drop by several cents the next two days, and then the question will be whether they hike them back up. The key will be what happens on NYMEX today and tomorrow, and I cannot predict that. So, stay tuned, and I’ll plan on posting again Wednesday afternoon.
Despite some hopes and predictions, we’re back to oil being close to $50 a barrel, which had driven up gasoline prices so far in 2005. This morning, the 20-cent margin price on gasoline is $2.05, while the cheapest gas in town is $1.94 down on 44th street. Once that difference is 10 cents or more, a price hike becomes more likely. So, I suspect they’ll raise prices above $2 again on Thursday, although I’m not feeling certain about this prediction. And my lack of certainty was confirmed by no price hike on Thursday. Honestly, if they had raised prices, I wouldn’t have taken credit, so I’m not going to take blame.