30-cent Chicago Discount means you’re paying TOO MUCH!

A very unlikely situation (a good situation) has developed here in parts of the Midwest. I’ve noticed a trend that has resulted in much lower wholesale prices for the Chicago PAD District. Gasoline coming out of Chicago (which is most gasoline supplied to West Michigan), is currently DISCOUNTED nearly 30-cents from what it’s being traded at on the NYMEX. Chicago wholesale spot prices for regular unleaded are $0.9972 tonight $0.972 this morning! (Yes, that’s under a dollar before tax and transportation costs) This is a result of refiners trying to sell off their remaining stocks of Winter blend gasoline before they are required by law to start production of lower polluting Summer blend gasoline. This discount will only last until the Winter blend is gone… think of it as a clearance sale!

Speedway and friends, LOWER YOUR PRICES! You’re making a killing- why can’t you pass this savings on to your customers? I take aim at Speedway since they were the first to rise to $2.05.

To benchmark, last week we only saw a discount of 7 to 9-cents off NYMEX prices, which meant that the same gasoline Friday was bought for $1.25ish per gallon. Any station taking delivery any time soon will be absolutely awash in profit since this Chicago Discount has really kicked in this week.

I ask that stations pass the savings they are getting onto consumers, or hey, at least HALF?!

$1.9X prices are too high. Where is $1.75? Let’s go stations. Lower your prices! The first METRO GR  non-club station under $1.80 will get a THUMBS UP from me on this blog if it happens this week (lets see if anyone takes me up on that offer).

Patrick

 

7 Comments

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  1. independent retailer

    Patrick
    Since your such an “expert” what should I be marking up a gallon of gas? At your suggested price of 1.75 I would gross 6 cents per gallon. As for the price being 2.05 last week, my gross on the 5th was about 9 cents per gallon. So since I’m “making a killing” I have a suggestion for you. Why don’t you buy a gas station and share all this cash with me.

  2. ITS CALLED THE AMERICAN BUSINESS DREAM Patrick They charge what they do because they CAN and if we don’t like it too bad for us.
    The company I work for is RAISING FREIGHT RATES 5 to 9 percent in the face of dwindling business. The CEO says he doesn’t care of he loses customers! This also flies in the face of their advertising on CNBC and NPR radio.
    Airlines have trouble filling planes.. BUT THEY RAISE PRICES. Fuel at 1/3 of what they paid a year ago…THEY RAISE PRICES! To cut the problem of unfilled seats they CUT ROUTES AND PULL PLANES.
    Its insanity pure and simple…and they really do not care. We have ours and if you arn’t getting yours TOO BAD FOR YOU!
    Logic is gone in the markets and we’re stuck again.
    Sorry to be so cynical…but thats the way I see it now.
    Dan in Rockford
    P.S. my Exxon/Mobile credit card is still saving me .15 cents a gallon though…I like that and I pay the card off every month. Hey its a start getting back at them. Use their money!

  3. Retailer, since you say you grossed 9-cents per gallon at $2.05, why can’t you gross 9-cents today and sell for $1.78? You complain about grossing 6-cents… so gross 9. You must have been fine with selling for $2.05, that’s what you raised your price to. I don’t see why you can’t pass your obvious savings onto your customers.

    You say I should open a station and share all the cash? You can’t be doing too bad if you’re still open… 🙂

    It’s not enough to have a job and have a successful business these days? You stick it to people who are unemployed by not passing savings on? I don’t understand.

  4. independent retailer

    I will start by asking my question again. What should I gross per gallon? As far as being happy at 2.05, that was Speedway that set that price. And you know that any price hike that is started by anyone else never lasts. If I were to go over Speedway then you would say I was “gouging” everyone. As far as still being open, why don’t you list the stats on how many stations have gone out of business in the last year? Fuel is not a profitable part of our business. I hope you would agree that you have to make money to stay in business. Yes I do have a job and I’m glad. I also employ 13 people who would be unemployed without me. Many times last year my partner and I worked (50+ hours per week each) without a paycheck. So don’t pass judgement on me when you don’t know the whole story.

  5. Yes, Independent retailer…you tell me how many stations went out of business last year and then who put them out of business. Was it lack of business accumen or was it the big oil wholesalers that charged what they wanted in order to DRIVE them out? I’m betting both.
    Excess profits are what is making an economic recoevry problematic today.
    Make what you will…and remember that its your customers that put you where your at. Just add it to your thoughts when you put the price up on the board outside the station. We all pay what we have to anyway.
    As ye sow so shall ye reap.

  6. You say: “As far as being happy at 2.05, that was Speedway that set that price.”

    So Speedway sets the price at your station, not you?

    You say “If I were to go over Speedway then you would say I was “gouging” everyone.”
    Hardly, I’ve definitely not been a fan of price hikes, but I realize when prices MUST go higher for a business to stay healthy… read through some posts to see the sympathy I have for stations (like this past summer)

    I could have a list of stations that closed, like the two BP stations in SE Grand Rapids, but then again, that was for tax evasion- let me guess, that “still” counts, right?

    I know you need to make money, and that’s fine- gross your 9 cents, and give a reason for consumers to TRUST YOUR STATION!

    Again, I’m far from passing judgement on your complete operations, but why not pass along cost savings to your customers? Every station raises prices before their tanks are even full of the expensive gasoline, so why not lower prices simply when your cost goes down?

    I’m glad you employ 50 people and I do sympathize with non-chain stations, but seriously- separate your tactics from Speedway and be a station to stand out- go against the common grain- and I’ll have nothing but praise for you 🙂

  7. Patrick…a cry in the wilderness but I HEAR YOU. Doubt any of the business men do though and even if they did they would only laugh.
    My dad used to be the part manager at a national trailer sales and service branch. Back in the 70’s EVERYONE got good priices for parts but the Mobil and Gulf and Texaco corporations paid LIST for their parts because we could CHARGE Em. The indipendents paid way less for their parts though…AC Carriers, Wagoner, Crystal Flash etc etc. They were fair so we were too.
    Again, as ye sow.

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