Here we go… again. $3.75+?

With the weakness in the dollar today, oil (and gasoline, of course) have both taken large jumps.

Wholesale gasoline is up to where it was last week and I expect that to continue.

I’d definitely stay full from tonight till the next few days. We could see $3.75-$3.85 any day as wholesale prices continue to increase.

Hopefully since Ed was predicting a possible ceiling at $3.75 Speedway doesn’t go any higher… cross your fingers!!

Patrick

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  1. I have a pretty good feeling that Ed’s prediction won’t last long. Based on today’s price $3.799 looks likely and the market is up another 4 cents so far today.

    I wanted to comment on your “Speedway Effect” section. It’s important to keep in mind that the roller coaster it causes works both ways. Because Speedway is a safety net for margins, a lot of stations take advantage of it and drop prices way down, because they know Speedway will go back up after a few days of bad margins. For example, prices in the Flint area today are 12 cents below cost, and that’s before credit card fees (another 9 cents per gallon) and all the other expenses. So, without the “Speedway Effect” prices would’ve just stayed higher instead of dipping down for a few days.

    It’s also important to remember that Speedway has to make such big moves because of those people that take advantage of the “Speedway Effect”. You’ve been watching prices long enough to realize how many weeks wholesale prices go up at the same time retail prices are going down. It’s just stupid to drop prices 15 cents in a week that your cost goes up 15 cents. But, that doesn’t seem to stop some of these people from doing it over and over. So instead of Speedway going up 15 cents to cover the increase in cost, they have to go up 30 to also make up for other station’s stupidity.

    Also, the reason that Wisconsin is so much more stable than Michigan is because they have a law requires stations to have a minimum markup of 6%. We all need to average at least a 15 cent margin (maybe higher with CC fees). If you take out all the times that margins drop way below 15 cents, then it cuts down on the times they need to be way above that. It also prevents companies with deep pockets like Wal-Mart from using predatory pricing to put small businesses out of business. I think 15 state’s have some sort of a minimum markup law, but none are as good as Wisconsin’s.

    We spent about 5 years trying to get a “Petroleum Stabilization Act” passed, but gave up on it 5 years ago. I can’t remember how things ended, but our goal was to set a minimum (I believe 6 cents) and a maximum that stations could markup their price. Our plan on the max was to say that stations can’t make more than the State does per gallon (about 39 cents per gallon today). We figured that they could never accuse people of price gouging if they always made more than us (which they do).

    If anyone is interested, here is the House version of the bill: http://www.legislature.mi.gov/(S(34kcls45snugyfm5o5vxro55))/mileg.aspx?page=getobject&objectname=2003-hb-4757

    And the Senate version:
    http://www.legislature.mi.gov/(S(uy1vr245xmgyph453iwsyj45))/mileg.aspx?page=getobject&objectname=2003-sb-0519&queryid=3797944&highlight=

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