Comment on the July 19 prediction: Prices rose twice last week, to $2.45 on 7/21 and then to $2.55 on 7/23. Take the average, and you pretty much have my CORRECT prediction.
Thursday, July 30, 2009, 4:00PM: Uh oh. NYMEX gas prices are up 13 cents a gallon today! Using my formula, a price re-set would be in the range of $2.59-$2.64. I expect this will be the new price on Friday. — Ed Aboufadel
I hate times like this. I am 50-50 on whether we get a spike tomorrow. I’m torn between near break even margins (at least if you are looking at the fact that Indiana wholesale adjusted should be lower than the spot price by about 5-10 cents still) and the fact that we had two spikes last week. Margins do say spike, but history says patience. Do be prepared and find someplace cheap tonight or friendly/spike resistant tomorrow, because the numbers say we should go up. But we are too close to call.
The numbers suggest (with Indiana at -3 cents margin and Michigan holding on at 1.8 cents margin) a spike is possible tomorrow. History shows, however, that two spikes in a week are really rare. With margins this close to break even, that makes the likelihood that a spike will happen to be very low.
If you need a fill up and can get gas in the $2.30s in Michigan, or below $2.30 in Indiana, you may wish to do so tonight as spike insurance. But like all insurance, you may not cash in on it.
Comment on the July 6 prediction: As predicted, prices have been dropping steadily, down to $2.25 along Lake Michigan Drive, in fact. So, the prediction was CORRECT.
Sunday, July 19, 2009, 11:00 AM: Retail prices have fallen significantly this month, lagging but in line with the drops in the wholesale price as indicated by NYMEX and elsewhere. However, last week’s rally on Wall Street started to affect the energy markets late in the week, and NYMEX prices rose 13 cents a gallon. We are at the point where rising wholesale prices are colliding with dropping retail prices, which means a price hike is on its way, perhaps as soon as Monday. I predict a re-set to $2.49 a gallon, except for the handful of gas stations still at that price. Yes, I’m talking to you Speedway Ada! — Ed Aboufadel
It looks like speculators are getting the boot when it comes to gas and oil. As of this morning they continue to fall as more bearish fundamentals are being used to control the market. What this means for you is even lower prices in gasoline.
Currently the average price of gas is beginning to catch up to wholesale, which has dropped more than 30 cents since it’s high on June 30th. Margins are at about 10 cents, from a high of 25 cents last week as prices have dropped 20 cents since July 2nd.
If wholesale were to flatten out now, we could see our prices level out in the low $2.30s. But the forecast is for wholesale to drop even further. Widespread $2.20s could greet the end of the week, and the near future could give us some stations into the $2 teens.
It looks to me like powerful people are starting to pay serious attention to how much of the ups-and-downs in energy prices has been driven by a “casino-minded” attitude towards the future markets. Last week, PVM Oil Associates employee Steve Perkins lost $10 millon in a day playing the “electronic oil casino”. This week, the Commodities Futures Trading Commission is going after Goldman Sachs and others concerning alleged manipulation, or perhaps the word is abuse, of the futures markets. (There is a lot of other nonsense going on with Goldman Sachs, too.)
All this news shouldn’t come as a complete surprise to readers of The Gas Game. We’ve been talking about the effects of speculators and “investors” in the energy markets for quite a while.