It’s hard for people to understand that the gas stations normally average a 10-15 cent markup over what they paid for the gas. Our wholesale prices have been all over the place in the last couple weeks. They went up almost 60 cents in 3 days, then later they went down almost 50 cents in 2 days. Last week they went down 10 cents one day and up 10 the next, yesterday it went up 2 and today is down 12 (the market looks like we will be up 5 or so for tomorrow). It is not unlikely that 2 stations across the street from each other could’ve had 30+ difference in cost a week ago.

So, it has been absolutely impossible to keep track of our inventory cost. What you are seeing right now is that some stations are blindly looking at what they can buy gas for today and dropping their price, and others are nervous about possibly losing money for the month and slowly dropping. Our average profit margins for the month could be anywhere between -10 and +30 depending on the timing of deliveries. Anything less than a 10 cent markup is not good for most of us.

Is Kalamazoo too cheap? Is Grand Rapids too expensive? The answer is yes and no to both. Some stations in Kzoo will lose money for the month and some will have a normal margin. Some stations in GR will have a normal margin and some will make a lot more than normal.

If we actually have a week with stable wholesale prices, then it will make the retail margins get back to normal.

Rack prices “only” went up 2 cents last night for gas, but diesel went up 12.

I hate to say this, but our break even cost is $3.609. So, Speedway’s Flint station is 16 cents below cost and their Grayling station is 53 cents above.

There is a slight chance that Speedway will move their lower priced stations up to $3.799. It looks like about half of their stations are at or below that.

I forgot to mention earlier that Goldman Sachs is the other big speculator company.

So, now we will most likely get a 10+ cent increase in wholesale prices because the traders were running out of time to make a profit on their contracts…

I guess that they aren’t too intimidated by that bill going through Congress.

It’s not just wealthy individuals that can be the problem. Big firms like Morgan Stanley, JP Morgan, and Deutsche Bank are huge speculators.

The futures market has went a long way past being based on actual supply and demand to determine a fair price. These “paper traders” don’t care what price the oil companies end up paying, they just want the price to go up so that they can make a quick profit.

The bill that the house passed is a good step toward what needs to be done. But, I would like to see them go one more step and ban anyone from trading in the market if they don’t have a storage facility capable of receiving the oil.