Consequence of Economic Action: Higher Gas Prices

Comment on the October 9 posting: It is good thing that wasn’t a prediction, as prices rose twice since then to $2.59, and then $2.75.

Sunday, October 25, 2009, 8:30PM: Readers of this blog know that I have been making the case the past few years of correlations between the stock market and the price of gas. Adding to this argument is that the Dow has gone from 6500 in March to 10000 this month, while a gallon of gas has climbed from $2.08 in March to $2.75 this weekend. (A barrel of oil has gone from $50 to $80 since March.) From what I’ve read, government and quasi-government offices such as the Treasury and the Federal Reserve have been pumping dollars into our economy since March to prevent this Great Recession from turning into a New Depression. The dollars are supposed to credit going again, for small businesses, large businesses, and consumers, but that isn’t happening very much. Instead, the dollars are finding their way to the stock, bond, and commodity markets, leading to a rousing rally in stocks, and higher gas prices. So, the economy continues to struggle, unemployment is high, but gas prices are rising despite sluggish demand. To put it mildly, this is not good at all.

The best we can do is figure out what is going to happen to gas prices this week, and maybe save you a few dollars. Although we hiked to $2.75 on Tuesday, wholesale prices continued to rise the rest of the week, and I estimate the 0-cent margin price to be about $2.59 or so, and the 20-cent margin price is $2.84. So, we have the potential for another 10-cent hike on Monday or Tuesday, but it is hard to be certain right now. So, keep your eyes on the price signs or the Internet, and be prepared if a station raises prices soon, so you can find one that hasn’t yet. In Standale, the Marathon is usually the last the raise its price. — Ed Aboufadel.

Updated: October 25, 2009 — 8:40 pm

4 Comments

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  1. Can somebody tell me WHY is gas $2.65 in Cedar Springs [$2.60 with your Meijer card] and $2.79 in Rockford?????? That’s a 14 cent difference and they’re only 5 miles apart. I don’t contribute to the Rockford community at all – it’s a big rip off.

  2. The price in Cedar Springs is close to what the retailers are paying right now. Is there a low-price competitor there (Admiral, Citgo, Wesco)?

  3. Thanks Ed for the response. I know I don’t understand how the whole gas pricing thing works, but I do understand competition. As of this week, there has been a Marathon gas station added to Rockford. It used to be a BP on the corner of Myers Lake and 10 Mile. Now it’s a Marathon. And then, the only other competition is Meijer by the highway. I don’t shop at that Meijer, either, their prices are higher than other Meijer stores and the only competition is D & W. It would be nice to get a Walmart Supercenter or Target Supercenter up in that neck of the woods, too.

  4. The Speedway Gas station in Algonac, MI has been at 2.59 for over a week. Most of the other stations between Algonac and Port Huron are in the 2.60s.

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