What is this new world we live in, where Speedway’s price hikes aren’t obeyed? Enough competitors, and enough Speedway stations, have been ignoring price hikes, which is good for most of us, and prices have quickly found their way back towards the 0-cent margin price.
Now, why is this happening? In my last posting, I speculated that someone at Speedway was heading for termination. Another theory is related to the fact that wholesale prices have been in a downtrend since April 1. I had thought that retailers would be aggressive about higher prices during the downtrend, since they paid a lot for the gas in their tanks, and wouldn’t want to take a loss. Looking back over four years of data, however, it seems that retailers are very impatient during uptrends. (For instance, during the first half of 2004, there was a price hike practically every week.)
I wonder if the retailers are having a clearance sale without telling us. Two weeks ago, they were paying about $2.06 to fill the storage tanks under the pumps. Now, they see lower wholesale prices ($1.92 this morning), and someone is thinking, “Let’s keep prices low and sell some gas and clear this $2.06 gas off our books.” So, let’s go with this speculation today and make a prediction: most of the Speedway stations will hike prices later this week, probably to around $2.14. BP and Shell will match it. After that, it’s anyone’s guess, even with Memorial Day coming up. Speedway started a price hike on Wednesday the 25th to $2.15, so the prediction was CORRECT. Although it seemed initially that the price hike would hold, a price war broke out on 44th Street in Kentwood, with prices as low as $1.84 on Memorial Day.
I wonder if someone at Speedway is going to be fired soon. For the second time in three weeks, the price hike e-mail went out to the stations, and then chaos insued. This is what I saw on Lake Michigan Drive last week: in the late morning, prices went up to $2.27. Then at 6PM, Speedway was back to $2.02. Then prices went up again, so that by Friday it was $2.21. Today the price is $2.15 at Speedway, but $1.98 at Marathon in Standale. There are reports of similar price behavior throughout Grand Rapids. The drops in oil and gasoline futures prices last week probably contributed to the mayhem.
So, what does that mean for this week? Based on Friday’s close, the 0-cent margin price is $1.96, and that’s pretty much the cheapest price in town. It is amazing to me that some places in town are still in the $2.20’s. Oil and gas prices are slipping again this morning. The upshot: I have no idea what is going to happen this week with retail gas prices. There was a price hike on Thursday to $2.15, except that in about 1/4 of the Grand Rapids area, there wasn’t. Consequently, prices worked their way back to below $2 in most places, especially Alpine. Arguable, “I have no idea” was the correct prediction.
It’s 9:40AM, and I see on grandrapidsgasprices.com that Speedway has started the price hike to $2.27, a day later than I predicted. Lash me with a wet noodle. This new price is 3 cents above the 20-cent margin price, as we’ve seen occur in past years in May. Now to turn attention back to the NYMEX futures as we start thinking about what may happen a week from now.
Hello everyone! Hope you’re enjoying your weekend. For those who don’t
yet know, I am heading south (just a bit) for the summer to Sandusky,
Ohio. Also, for those who don’t know, there is a rather large
amusement park where I am working. I will try and keep this updated,
but sometimes, I’ll be putting in very long days.
As for gas prices, I believe we’ll see a rise early week. I am
thinking it might be to 2.14 or somewhere in that neighboorhood. It
shouldn’t be too large since we’ve been seeing wholesale gas prices
coming down lately, but you never know. I would suggest filling up at
a Kentwood area station ($1.99) before the week starts. Happy hunting!
Hope to mail more updates, but if not, keep your eye on
www.grandrapidsgasprices.com and check out the message boards!
The rendevous with $2, predicted on Monday, has arrived, as the price hike predicted for Thursday did not. We’re at the 0-cent margin price, now, so there’s a price hike coming Monday or Tuesday. I’ll be filling up first thing Monday morning. I was WRONG about a price hike on Monday, and WRONG about a price hike on Tuesday.
Hello everyone, hope you are enjoying the sun that we saw in Grand
Back to the topic at hand-
this is a tough call on gas prices this week. We had very positive
reports from the DOE and API about oil inventories (DOE says a 4 mil
barrel rise, API says over TEN mil barrel rise!!)
I don’t see how wholesale prices didn’t go down today.
Crude inventories are now OVER the “above average range” for this time
of year. Last time we had this much crude was March of 2002. Gasoline
inventories remain above average, and gained a few million barrels
last week as well… I just am waiting for the bubble to burst and for
oil prices to go down to $40 and gasoline to $1.25 wholesale ($1.89 pump)
My advice: *IF* there is going to be a rise, it will NOT be large at
ALL. PERHAPS at worst 2.14, but some stations are over that already…
If you need to fill up, goto a station thats cheap. Personally, I am
not going to top off. I don’t think we’ll see a rise… remember
though I have made mistakes ;)… just not many. haha.