Price hike? Flip a coin.
Monday 21 May 2007 | Posted By Ed Aboufadel | Commentary
Comment on last week’s prediction: I should have kept my 5/16 prediction. Prices fell a bit on Friday through Monday, with gas as “cheap” as $3.18 on East Beltline. So, my prediction was WRONG.
Monday, May 21, 2:00PM: No predictions to make right now. I am having the hardest time getting a handle on wholesale prices right now in Michgan. Clearly, we are completely out of whack with NYMEX, but the question is how much different are we? On the Gas Game website, a poster known as “retailer” says “today’s cost is $3.35″, which would explain why there were no further hikes since last Tuesday. On the other hand, $3.49 corresponded to a wholesale price before taxes of $2.70, and a site where I saw the $2.70 wholesale price said $2.86 last Thursday, and again $2.86 today. Go figure, right?
Memorial Day weekend is coming up. Last year, we had a hike the Wednesday before and the Tuesday after. In 2004 and 2005, there was no hike the week before, and none the first few days after. In 2002 and 2003, there were Thursday hikes both weeks. So, there’s no pattern there to look at either.
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We had another increase on Friday of around 4.5 cents which puts prices around $2.83 at the rack and cost at around $3.40. I was surprised that Speedway didn’t move, most of the state has low enough margins to justify it (35 cents below cost in South Haven).
$3.599 gets us back to the normal 20 cent margin they like to restore to, but I would settle for them getting everyone back to $3.499 for now. Unless we get a large drop tonight, I would bet on them moving tomorrow.
We had another 4.5 cent increase last night, so that would put the 20 cent margin at $3.649. I don’t know if they will go over $3.599 or not, but I’m sure they will go up to something today.
There we go, finally arriving at the $3.65 target prediction.