Month: July 2005

Tuesday, July 26, 2005

Last Thursday afternoon, I headed north, and came back on Saturday. In Cadillac, prices everywhere were $2.39, so it looked like the price hike happened. But in Reed City, you could get gas on Saturday for $2.10, and in Grand Rapids, it was as low as $1.97 on Monday morning. At $1.97, retailers were losing at least 20 cents per gallon, so I’m not sure why they would let it go that low. I guess it is competition, since sometimes cash flow is more important than profits. (Ask General Motors about that.) The $2.36 did not restore their margins to 20 cents per gallon, so they is room for another price hike at the end of the week to $2.45. That’s not a prediction. Just something to wonder about. On Friday afternoon, Speedway reset to $2.36. In some parts of town (notably Standale), competitors did not match prices, and Speedway had to give back the price hike in those places.

Tuesday, July 19, 2005

On the postive side, wholesale prices have been dropping since peaking on July 7. This has led to prices as low as $2.16 in town this morning. However, the 0-cent margin price is $2.14. So, unless wholesale prices continue to drop the next two days, expect a price hike on Wednesday or Thursday, to somewhere in the neighborhood of $2.35. A price hike did occur to $2.36, but not until Monday 7/25. In the meantime, a price war broke out in Kentwood, with prices as low as $1.97 a gallon on Monday morning before the price hike occured. So, the prediction was WRONG.

Tuesday, July 12, 2005

Friday’s price hike to $2.49 was remarkable as it was the first Friday price hike I’ve seen, and it was the first time I remember two price hikes in one week. In economics, they would call this a black swan, rare but possible. Who to blame? Wholesale prices shot up last Wednesday (before the London bombings) and Speedway and friends have a history of passing those quick jumps on to consumers. Sadly, as of this writing, wholesale prices are about where they were after last Wednesday, but so are retail prices. So, I don’t see a price hike this week, and expect prices to slowly drop below $2.40 everywhere. (I know in some places, like Allendale, it is already about $2.34.) Write your representatives in Congress about gas prices — maybe they can do something! There was no price hike last week, so the prediction was CORRECT. Prices dropped below $2.30 at a lot of stations over the weekend.

Thursday, July 8, 2005

While yesterday’s price hike to $2.35 was going into effect, prices on the futures markets soared, with wholesale gasoline prices going up 10 cents yesterday! Remarkably, a consequence of this morning’s London bombings is that oil and gas futures prices have dropped some, according to CNBC. So, I think the chance of a second price hike today (to $2.45) is pretty much zero, but I don’t believe we are going to be seeing much price cutting this weekend like we usually do. I reserve the right to change my opinion once I see how the futures trade today and tomorrow. Prices did not rise on Thursday, but they did on Friday, to $2.49!

Monday, July 5, 2005

After a temporary fall, oil and gas futures went up again on Friday and over the holiday weekend. Meanwhile, retail prices have been dropping. This is how price hikes are made. Look for Speedway and friends to reset prices to $2.35 or so again this week, maybe even today. $2.35 is exactly what happened on Wednesday the 7th — CORRECT!

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