Tuesday, May 23, 2006, 2:15 PM: Last week, stock and commodity markets fell, including the prices of gasoline futures contracts. So far this week, these markets are stabilizing, and today they are rising … together. In fact, gas futures are up 7 cents today from yesterday. With prices dipping below $2.70 around town, they are hitting the 0-cent margin price (using the HB/RU average), so look for a price hike on Wednesday or Thursday, to somewhere in the neighborhood of $2.89. On Wednesday the 24th, prices rose to $2.89, so the prediction was absolutely CORRECT. After slipping over the Memorial Day weekend, prices re-set to $2.89 again on Tuesday the 30th.
Month: May 2006
Hello to everyone from Sandusky, Ohio… America’s Roller Coast!
Looking like Grand Rapids (and Sandusky!) will be seeing a price hike as hurricane news has commodity investors coming back after last weeks sell-off. Current prices near me are down to as low as 2.59 for regular unleaded, and in Grand Rapids I see prices down to the upper 2.60’s. I paid 2.89 for premium this afternoon (plus 5% off using my BP Visa equals 2.74 per gallon!)
However, all good things must come to an end. Last year at this time, prices were in the very low 2’s, but we’re seeing prices much higher this year due to Iran, Nigeria, and now, the hurricane season that is just around the corner.
Prices look to fluctuate a lot this summer, but I think we’ll see prices moderate until the FIRST major GULF Hurricane.
But, for now, fill up! Looking for 2.89-2.95 for REGULAR in the Grand Rapids area, and 2.85-2.89 for regular here in Sandusky.
Happy Memorial Day!
Yesterday, I signed up for Speedway’s “Speedy Rewards”. Am I moving to the dark side, or am I just a sucker for those frozen Pepsi’s? Maybe I’m just feeling good that they kept the price (barely) under $3, despite a strong run-up in wholesale prices last week. That run-up has turned around, as we have been expriencing extremely volatile commodity markets the past few days. For example, gas futures fell 12 cents a gallon yesterday. The volatility is proof that you have prices being knocked around by speculators. Long-term, this all averages out, as supply meets demand, but short-term, it can play havoc on gas pricing, and price predicting. Using last night’s closing prices, and averaging the HU and RB contracts, we get a 0-cent margin price of $2.70 and a 20-cent margin price of $2.91, and the cheapest gas at the moment is $2.83 in Allendale. So, I wouldn’t pay more than $2.89 a gallon today, even though the price is still $2.99 in a lot of places. It is not at all obvious how the rest of the week is going to play out. The futures markets went down with the stock market, so we got no price hike.
I said $2.59 by the end of the week, not $2.95! And here I am with a 1/4-tank. OK, so what happened here? Two things — first, it looks like averaging the unleaded and the reformulated blendstock price is the way to go right now, and the RB price was 30 cents higher this morning. Second is that NYMEX prices shot up 12 cents a gallon today! Time to seriously worry about gas above $3. (That’s not a prediction — yet.) An additional hike to $2.99 followed, but then prices fell.
Monday, May 8, 2006, 12:30 PM: Wholesale prices are dropping today, and all indications are that we will see lower prices all week. It is possible some daring station posts $2.59 by the end of the week. That hike to $2.95 today means that I was seriously WRONG!
An interesting and long article on the front page of Sunday’s GR Press about gas prices. Some of it fits my experience, but I don’t agree with the calculation about stations losing money. I’ve been doing the Gas Game publicly for four years, and I have heard from many dealers, but no one has ever said shipping and handling adds 18 cents to a gallon of gas. If you add that to my formula, then price hikes basically re-set the price so that the retailers are breaking even, and that doesn’t ring true with me. I have also been told that competition is not “dwindling” and is rather intense. By my estimation, break-even for the retailers is in the low $2.70s today, so we are setting up for a price hike to $2.89 or higher soon. The next day, prices rose to $2.89. Now that’s what I call CORRECT!