Comment on the March 16 prediction:Â We have only had one price hike in the past two weeks, to $3.39 on March 25, so the prediction was WRONG.
Saturday, March 29, 2008, 4:30 PM:Â On March 3, the wholesale price was $2.68 on NYMEX and $2.43 on AXXIS-Chicago, and the retail price was $3.05.Â During March, the AXXIS and NYMEX prices converged, and then AXXIS jumped ahead, so that on Friday, the wholesale prices that were reported were $2.71 (NYMEX) and $2.80 (AXXIS), which corresponds to a retail price with a 20-cent margin in the $3.50 to $3.60 range.Â Yet, we didn’t get the second hike last week, and the hike to $3.39 could have been worse.Â Thank you, Speedway?Â Nevertheless, look for another price hike in the coming week to at least $3.49.
Seeing as how refiners were losing money for parts of this week refining oil into gasoline, utilization was low. It is rare, but refiners were losing some money last week as the cost of a barrel of oil was *more expensive* than the cost of their finished gasoline. They were losing cents on refining every gallon of gasoline.
Having said that, here are some numbers:
- Refinery utilization dropped to 82.2%- until the “crack spread” or earnings for each barrel of gasoline exceeds the cost of a barrel of crude, this will stay low. The only way that utilization will rise is if pump prices rise.
- Crude oil inventories remained unchanged from last week, even though much less crude was produced/imported than usual.
- Gasoline stockpiles fell 3.3 million barrels. This isn’t a surprise due to the issues I stated above about no profit from refining
- Midwest PADD storage fell to 56+ million barrels from 59+. This is a large drop and we may see any Chicago Discount begin to dry up.
This was a bad report, but local stations have already hiked to way over my previous target of 3.25-3.29. I believe we may see a rehike tomorrow to $3.45-$3.49, so keep an eye out between 9am-10am.
We’re back to usual here folks- pump prices will “march” higher to begin April!
Watch out for a possible gas price hike to $3.25-$3.29 tomorrow or Tuesday. Prices have drifted lower and wholesale prices have been similar to riding the Magnum (R) lately.
I filled up this evening for $3.14/gallon… odds are pretty high that we see this hike passed on.
FYI- The latest DOE report still had Midwest gasoline inventories near a record high at 59million barrels, which is good news.
Diesel should fall back below $4 in a week or two.
I’m closely monitoring a huge selloff in gasoline and oil markets at this hour. Gasoline futures are down nearly 20 cents per gallon (7%+!) and oil futures are negative as well.
This could be a significant turnaround for oil and gasoline as MANY now fear the economy may be more damaged than previously thought after news of Bear Stearns being bought by Chase rattles traders.
There could be a hike that is already in the pipes for Grand Rapids (meaning it was decided before today) so that might still come to pass, but look for local prices to nosedive soon, pending the final numbers today.
This could be a sign that the oil market’s momentum has turned negative, especially since the dollar hit new lows with nearly all world currencies today.
I’ll keep an eye on it.
Sunday, March 16, 2008, 6:45PM:Â The annual Gas Game March Madness continues, as we got a hike to $3.45 last Tuesday.Â Although retail prices have drifted down from that price (with as low as $3.28 in Allendale), wholesale prices have ticked a bit higher, setting up for a hike to at least $3.49 on Monday or Tuesday.Â That’s a prediction.
As gasoline prices try to stay ahead of crude prices, the pain at the pump has been increasing as you’re aware. $3.45 was last time, but what next? Well, according to my benchmark in Indiana, we may soon see $3.55-$3.65. More likely towards $3.55-$3.59.
I would keep your tank full and keep a watchful eye on this site tomorrow morning (and GrandRapidsGasPrices.com) to see if prices have started to rise.
Keep in mind that as Spring goes nearer, it becomes ever more difficult to forecast gas prices.