GR Gas Prices: Hike to 2.39… Justified?

Well, out of nowhere, again, Speedway initiated a price hike to 2.39. Expected? No. Suprise? Not after last weeks “unexplainable” hike to 2.35 (that oddly enough reverted down to 2.17 in areas).

After I got some feedback from everyone on last weeks hike (thanks for the e-mails by the way), I did some digging to see if there was ANYTHING that could have possibly explained why we in the Michigan area are suddenly paying much more than average (U.S. average is now 2.18).

I dug up some information on local gasoline supplies (out of Chicago). The reason why we get really cheap sometimes is because of this. Our local supply sometimes swells in the summer, making Grand Rapids “very” cheap. However, that is now reversed… and we’re paying a “Chicago Premium” for gasoline.

Here are some numbers for you to see why we’re paying the “Chicago premium”:
Our PADD (Storage district) had roughly 54.5 million barrels of finished gasoline in storage on OCTOBER 13. The next week (Oct. 20) when the DOE report came out, we were down to 51.9. That tells me that the second largest refinery in the U.S. in Gary, Indiana, was (and perhaps still is) undergoing maintenance. Now, on October 27, our PADD storage is down to “just” 50 million barrels.

We’re paying more because of refinery maintenance and strong demand. Isn’t it interesting that once gas prices get down to 2.19 that we have all sorts of “maintenance”?

We should see our local storage go up as we enter early November and as refineries come back online after undergoing routine fall maintenance.

Be patient. 2.39 is high (It will probably come down to 2.30 in a decent amount of time) but it is mostly justified.

After thinking just two weeks ago that we might make it down to $1.XX, I think those chances are now nil.

~Patrick

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