Month: June 2011

After a silly hike attempt to $3.59, the real deal is coming on Thursday!

Comment on the June 24 prediction:  Prices kept falling until Tuesday afternoon, so the prediction was CORRECT.

Wednesday, June 29, 9:30PM:  I’ve been driving around Grand Rapids the past day and a half, seeing some stations hike prices to $3.59, others keeping prices in the low $3.40’s, prices going up to $3.59 and then back down to $3.41, and it isn’t clear if Meijer or Speedway started this.  It doesn’t matter, though.  Stocks, oil, silver, etc. have all been rallying this week, and the 0-cent margin price tonight is around $3.55.  They will raise prices tomorrow to the $3.69-$3.79 range, and all the stations will follow suit without complaint, just in time to have a great Independence Day weekend!

Prices To Keep Falling; Notes on Market Manipulation

Comment on the June 15 posting:  No reset to $3.79.  Reports of a reset to $3.69 yesterday that didn’t pan out.  I guess the retailers were thinking out loud, too.

Friday, June 24, 10:10AM:  A couple of related items today:

1.  Wholesale oil and gas prices really took a hit yesterday, putting the 0-cent margin price at about $3.30.  With prices way above that number, look for markdowns all weekend.  That’s a prediction!

2.  One big contributor to the drop in prices was Pres. Obama’s decision to release oil from the Strategic Oil Reserve.  While there is debate about whether or not this is a good idea from the point of energy security, in terms of manipulating the market, this was a great move.  Oil was already dropping in price this month, and this was the type of decision that will scare some of the speculators out of oil contracts, which should drop the price further, at least short term.  What Pres. Obama’s administration should do next is then buy back the oil at the cheaper price, which would make money for the taxpayer for once.

3.  In a way, this is all disturbing though.  Here is a nice quote by Robert Prechter (brought to my attention by Peter Atwater) that captures what I have been harping on for quite a while — that the energy markets are broken:  “There is an entirely different pricing dynamic for assets purchased for their fundamental utility value versus assets purchased for their investment potential. When the price of a good or service rises, fewer people buy it, and when its price falls, more people buy it. This response allows pricing to keep supply and demand in balance. In contrast, when the price of an investment rises, more people buy it, and when the price falls, fewer people buy it. This behavior is not an occasional financial market anomaly; it always happens.”  And this is our problem, as oil and gas has become an investment rather than a good.

4.  Which brings us to the news that federal regulators have started a new investigation into whether oil companies and refiners have manipulated markets, raising oil prices to their benefit.  My feeling about this is that they probably are not — that #3 above better explains what is going on. At the same time, because the markets are broken, it wouldn’t be difficult for oil companies and refiners to manipulate the market.  The solution, rather than arrest people for following the rules of a broken game, is to change the rules.  For example:  for any energy futures contract, the product must be delivered at expiration.  That is, if you buy an oil futures contract, you have to buy the oil when the future expires.  That will close the casino!   — Ed Aboufadel

Musings about a re-set to $3.79

Comment on the June 7 prediction:  Prices have been falling, with as low as $3.63 in Kentwood today.  CORRECT.

Wednesday, June 15, 12:50PM:  Last night, wholesale prices (via NYMEX and other places) were about $3, putting the 0-cent margin price (adding in taxes, shipping, etc.) at about $3.59, if my calculations are correct.  The general Gas Game rule is that when retail prices are near the 0-cent margin price, it is time to worry about a price hike.  Since we aren’t close to $3.59 in most places, I am not ready to worry yet.  (Gas is still over $3.90 in some places.)  What is more likely to occur is a statewide re-set to $3.79 tomorrow, which will bring down prices in some places and raise them in others.  Something like this rarely happens, so I’m not going to make this a formal prediction.  I’m just thinking out loud today. — Ed Aboufadel

Falling Below $4 Again

Tuesday, June 7, 2011, 1:45PM:  Time to predict how the next several days is going to play out.  As GasBuddy noted yesterday, wholesale prices have dropped considerably the last few days.  This may be due to getting those refinery problems fixed, and it also is reflected in the weakness in stocks since the end of May.  Gas in Lowell has been $3.86 since Sunday, and the prediction is that we will see prices falling through at least Monday, perhaps as low as $3.79 somewhere in the area. — Ed Aboufadel

10 Years of The Gas Game

Wednesday, June 1, 2011, Noon:  Wow, what a hike to $4.19.  My crystal ball has been rather foggy the past two weeks, but my friends at sent out a timely warning last night, and Bill also had a posting yesterday.  Based on the way the market is acting so far today (lousy), maybe $4.19 won’t last.

Ten years ago today, on June 1, 2001, is when I stated my daily monitoring of gas prices and NYMEX prices.  By the end of 2001, I had figured out what I needed in order to start making predictions.  In June 2002, the “gas game” essay was published in the Grand Rapids Press, and on June 12, 2002, I started this blog with my first posting.  So, for the next twelve months, we will be celebrating “10 Years of the Gas Game”.  The gas price in Standale on June 1, 2001?  $1.75 a gallon. — Ed Aboufadel (c) 2017 Frontier Theme