Sit down and read. $3.65? Possibly.
2 comments Tuesday, 05-15-07 | Posted By Patrick | Predictions
OK folks, so you might want to sit down to read this.
Last week, (the 10th) I made a long post about what was wrong, how to fix it, and how long things will stay bad. I mentioned that $3.50 was in the realm of possibility, and we’ve hit that in Grand Rapids today- $3.49 at Speedway and I just got a Meijer alert, which means Meijer will most likely match.
You’re asking WHAT HAPPENED over-night, or WHAT HAPPENED this time?
Prices on the wholesale market closed up last week big time, but yesterday they DROPPED 6 cents per gallon. We’re seeing that rise at the pump now, but it will take several days before the 6 cents comes off our prices. Gasoline is down another cent right now on the wholesale market, to 2.29.
What I think is happening:
Traders/Distributors are buying up Midwest gasoline at cheaper prices and “hoarding” it. Supplies are tight right now, REAL right in the Midwest, so they are trying to get enough gasoline for themselves and their customers. That demand is driving prices higher.
Where do we go from here?
Well, last time I said $4 gas is 1/50 odds. I’m pretty firm on that, but we might now see $3.65 sometime…
Sit down for this, again:
Last night I checked my benchmark station in Indiana. They were at $3.24. Last night they hiked to $3.34, and this morning $3.44!! Remember what I said? West Michigan/Grand Rapids prices usually are about 15-20 cents higher than that station. Does that mean we’ll see a hike tomorrow to $3.65? POSSIBLY, I’m not sure. This “climate” in The Gas Game makes predictions so difficult. The current trend is definitely upward, so make sure you’re keeping full.
IN NO WAY IS THIS A CRISIS. We have plenty of gasoline. I’m starting to worry that the market is going on fear now, with traders buying up as much as possible. We’re going to hit a peak very soon in my opinion and we might just see a large correction downward.
I’m thinking about organizing a Grand Rapids “Day In” campaign that would encourage people to stay home after they work, or simply ONLY use their car for work purposes. Ditch the restaurants, ditch the shopping. If the entire economy starts to falter, so will Big Oil! WE are the ones that can have control. Without people buying gasoline, without people shopping, then what?
Would anyone support this idea with me?
E-mail me if you’re interested. All you have to say is “I’m interested” or perhaps give me your thoughts and opinions.
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I’m actually in favor of high gas prices. Not that I like paying them, or that I want *you* to pay them, but I think high gas prices are the economic force behind positive change. We in the US have amazingly *cheap* gasoline, globally speaking. We have little to complain about, even at $3.25
I have seen gas station boycots before. The day at home that you are thinking about is something new, though. Usually in a boycott situation everyone just doesn’t-fillup-today, which means they fillup the day before or the day after. By actually *staying home* you’re talking about changing behavior; actually using less gas on that day. It has more potential than a gas station boycott, but still isn’t likely to cause any concern to the oil companies because it cannot be sustained. We have a necessity to commute and travel long distances.
Anyone who is willing to ‘stay home’ for a day should spend that time checking their tire pressure and taking the unnecessary cargo out of their vehicles, and maybe go to maps.google.com and make sure they are taking the most direct routs to and from their common destinations. This has a lasting effect.
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Here is a social force that I think might succeed, if you intend to leverage your audience to influence gas prices: Choose a station (company) that you feel is holding prices too high. (or one that you just don’t like) You are uniquely qualified to make this assessment since you watch TheGame more closely than the rest of us. Once you have identified a company, suggest that your audience *avoid* that station until further notice. Go ahead and buy gas anywhere, just not there.
This will shift sales from that company to another company in a sustainable way. The only way for the company to redeem themselves (and get their customers back) is to discount their prices to your satisfaction. When you think they have done so, notify everyone to resume purchasing at that company. Then pick the next company to avoid.
With what you know about the profit margins, or crack, or whatever it is called, you can somewhat fairly decide if the companies are acting fairly. Send out the alert when one (or more) of them are not.
Retail boycotts will never have any affect on prices or hurt the oil companies. Because contrary to popular belief, the oil companies don’t own very many stations. Nationwide they own around 2.5% of the retail stations. In Michigan there are almost 5,100 retail stations, and other than the 295 Speedway stations that Marathon owns, you will have a hard time finding any other stations in MI that are ran by oil companies. They have all sold off or leased out the stations they used to run, because of the poor retail margins in the midwest.
The oil companies don’t know and don’t care what their branded retail stations sell. If their branded stations buy less from them, they will just sell more of it as unbranded. As long as our country refines less gasoline than we consume everyday, there are always going to be stations that will buy every gallon they can produce.
Boycotting retail stations based on the brand of gasoline they sell, will only hurt the small business owners that are already struggling in our industry. I would guess that over 3,000 of the stations in MI are single station owners, along with several chains of 10 – 100 locations. I have not talked to anyone in the last 5 years that is happy with their profits. Over 90% of the price of gas is decided before it arrives at your local station.