January 10, 2009, 12:00 PM: I was in Washington, DC much of the week, but no one wanted to talk to me about gas prices. Actually, I was there for the annual mathematics meeting. Yes, we actually have annual meetings. Prices over $2 were standard in the DC area, and I watched the hike to $1.99 in Michigan via the Internet. The three recent hikes, starting 12/29, reflect a stunning rally in NYMEX, from 80 cents a gallon on Christmas Eve to $1.20 or so on January 5.
The three recent hikes provide a chance to re-calibrate my Excel spreadsheet. It looks like the AXXIS price is a pretty good proxy for wholesale prices in west Michigan right now, using a margin in my formula in the range of 21 to 25 cents. If that is the case, the 0-cent margin price is in the low $1.80’s, as fmcman reports on GrandRapidsGasPrices.com. And, lo and behold, retail prices in the area are from the low $1.80’s to $1.99. So, I expect prices to drop slowly over the next several days, which would set us up for a price re-set on Thursday. This feels like weather forecasting, though, looking five days ahead, because we don’t know what is going to happen in trading on Monday and Tuesday.