Consumers get a spanking as prices rise to $2.69
5 comments Tuesday, 05-26-09 | Posted By Ed Aboufadel | Commentary
Tuesday, May 26, 2009, 1:55 PM: Woe to us. Prices rose at random places on SATURDAY to $2.59, and today Speedway is making sure we understand with a system-wide re-set. The new price in Michigan is $2.69 a gallon. There are two separate issues here: one is the relentless climb since April 27 (when gas was $1.99 a gallon). The other is what happened this weekend.
The relentless climb could be just a delayed seasonal effect, as we get these moves every year in March and April, often related to the switch to summer blend gasoline. I think, though, that after the stock market recovered from that scary low in early March, the speculators are looking to make money again and driving up wholesale energy prices is a way to do it. I have some confidence in this observation because it isn’t that retail demand for gasoline is on the rise, and gold prices have been climbing lately, too.
As for this weekend, there are some goofy things going on in Chicago. I learned this morning that wholesale prices went up a lot on Friday in Chicago and that’s what caused the hike to $2.69. Now, this morning, they’ve dropped almost a dime a gallon, and maybe, just maybe, we’ll see that in our retail prices by Wednesday. That’s a wish, not a prediction.
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The market before the weekend started made it look like Speedway could have spiked, but they held out during the holiday weekend. I saw this quite a lot last year, and I like it a lot better than spiking on the holiday, as they did on Christmas and New Year, at least here in Indiana.
Was there an ether leak in the traders pits in Chicago last week? We are now .20 over the national average and the world is awash in oil and the Saudis see no need to lower out put?
Traders Indeed! Maybe but maybe they see something here though. 3 dollar gas and workers getting called back into the workplace? I’m seeing scrap shipments climbing at a decent rate outta the west Michigan area via rail the past two weeks. Lumber inbound is also up to a certain extent. And watch paper for boxes. The PCA plant on Ivanrest is working 10 hour days and getting boxcars almost daily, something that hasn’t happened since last summer/fall. When we see PCA in Manistee pick up appreciably and the Sappi mill reopen (doubtfull for now though) you will see the beginning of the end.
I’ll take 3 buck gas if everyone gets back to work.
What’s going on on the East side of the state?
$2.79 is starting to pop up.
Well, gas jumped 21 cents at our local pumps yesterday. Glad I filled up at $2.38 the day before. Can someone please explain to me why gas prices are not the same the were when oil was $63 last time? I’m just completely confused on that part.
Nate, I don’t know either. The people who buy and sell wholesale gasoline in the Chicago area are going crazy right now.