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

Updated: June 15, 2011 — 11:51 am

21 Comments

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  1. Good news!

    Looks like we are going to finish this week without an increase.

    Chicago gasoline for immediate delivery is currently (2:42 PM ET) down 5.382% on the day to $2.8145. That’s a decrease of 16.01¢ from yesterday’s close of $2.9746.

    New York gasoline for July delivery is currently down 12.30¢ to $2.9416.

    New York WTI crude oil for July delivery is currently down $4.09 to $95.28.

    Currency exchange rates are almost certainly responsible for these large drops. I normally do not see any daily exchange rate differences above 1%. Today, the U.S. Dollar is a lot stronger against the big six foreign currencies:

    -1.8665% € against U.S. $, meaning the dollar is stronger.

    -1.2349% Australian $ against U.S. $, meaning U.S. dollar is stronger.

    -1.2202% £ against U.S. $, meaning U.S. dollar is stronger.

    +1.1506% U.S. $ against Canadian $.

    +0.9215% U.S. $ against Swiss Franc.

    +0.5907% U.S. $ against ¥.

    To put this in more meaningful terms, 1 U.S. dollar now buys 97.93¢ Canadian, 1.11¢ Canadian more than yesterday.

    Not surprisingly, there are some pretty big percentage drops among other commodities, including: -5.16% oatmeal, -4.54% cotton, -2.99% Chicago wheat, -2.98% lumber, -2.77% corn. All the energy futures are down 3.99% to 4.86%, except natural gas which is up 0.04%.

    As far as local retail prices, the lowest price in Kalamazoo last night was $3.699 at two locations downtown. Today, that price is available at 16 locations, plus 1 at $3.679 and 7 at $3.669. The metro average has fallen to $3.755.

    The Grand Rapids metro average has fallen to $3.800. There is one station at $3.659, 6 at $3.639 (all in Kentwood), and 1 at $3.629.

    The Michigan average now is $3.811.

    That famous BP in Romulus is still at $4.299 (reported at 3:46 p.m.) and 20¢ higher than the second highest reported stations in the state at $4.099 (8 of them).

  2. Oil down nearly 5 pct. on stronger dollar, Europe

    http://news.yahoo.com/s/ap/20110615/ap_on_bi_ge/oil_prices_glance

    13 mins ago

    NEW YORK – The financial crisis in Europe threatens to snuff out the four-month rally in oil that began in Libya.

    Here’s a breakdown of how energy contracts traded Wednesday:

    On the New York Mercantile Exchange:

    Crude fell $4.56 to settle at $94.81 per barrel.

    Gasoline dropped 14.11 cents to settle at $2.9235 per gallon.

    Heating oil lost 14.10 cents to settle at $2.9848 per gallon.

    Natural gas gave up less than a penny to settle at $4.577 per 1,000 cubic feet.

    On the ICE Futures exchange:

    Brent crude fell $6.34 to $113.01 per barrel.

  3. I was working on the numbers myself this morning, and noticed that here in Fort Wayne, some stations seemed to be at or close to the 0 cent margin. And I noticed today, on GasBuddy, that Indiana moved into the yellow/orange, meaning that we have reached or are just below average USA pump pricing. Historically, we never seem to be able to go more than a day or two without either a price hike or a reset. It will be very interesting to see if we can make it the weekend, given the information in the two comments.

  4. Timmp, I would not worry about the rest of the week. Wholesale prices fell at least a dime on Wednesday, as Diether notes, so the 0-cent margin price is more like $3.49 today.

  5. At 4:03 PM ET today, the Chicago spot was down another 0.413% to $2.7994. This puts the current retail bottom around $3.4896 in Michigan.

    Speedway prices in southwest Michigan currently range from $3.659 in Oshtemo and Texas Townships to $3.899 in Bangor. The Oshtemo price is 16.94¢ above the bottom price. At an average decline of 3¢ per day, we’ve got about another 6 days of decreases, which would be Wednesday, June 22 for the next reset. That requires, of course, that the wholesale price stays at its current level, which it almost certainly will not. It’s usually unrealistic to predict increases more than 36 hours in advance, except when there is a refinery or pipeline disruption and Speedway waits a day longer than expected. You just have to check the market daily.

    New York gasoline for July delivery settled 2.59¢ higher today at $2.9494.

    Oil barely moved today, up 14¢ to settle at $94.95.

    Currencies were back to normal today, with the U.S. Dollar a tiny bit weaker against 4 of 6 major foreign currencies. Rather than differences in the 1% range like yesterday, the differences were in the more normal range of 0.0052% to 0.1156%. The U.S. Dollar currently buys 98.17¢ Canadian.

    The big movement today was in agricultural commodities, with all but two of the majors down. Here were the biggest movers:

    -4.47% cotton (120.18)
    -4.19% Chicago wheat
    -3.18% oats
    -2.99% cocoa, priced in U.S. Dollars (2,886)
    +3.23% sugar (24.930)

    Current metro retail gasoline averages:

    $4.169 Chicago (one of only 4 metros still above $4)
    $3.811 Ann Arbor
    $3.778 Michigan – Lansing takes 8 of the 15 lowest prices
    $3.749 Grand Rapids – $3.599 lowest at 3 stations near 44th & Eastern
    $3.705 Kalamazoo – $3.629 lowest cash price, $3.649 lowest credit price
    $3.686 USA
    $3.674 Lansing
    $3.665 Indiana
    $3.650 Fort Wayne
    $3.466 Toledo – lowest in the Great Lakes, w/ Speedway lowest $3.249
    $3.306 Spartanburg, S.C. – lowest in the country

    Michigan now has the 12th highest gas prices in the nation, when the ranking counts Washington D.C. like a state. Indiana comes in 27th highest in this ranking. Ohio has the 11th lowest (41st highest) in this ranking.

    Wholesale prices have fallen so much, the BP next to Detroit Metro Airport finally dropped its price 10¢ today to $4.199 and it has fallen to the 4th highest reported price in the state. A price of $4.499 was reported on Drummond Island at 5:51 p.m. today, the highest in the state. Drummond Island is probably always higher than the BP in Romulus, but it doesn’t get reported very often.

  6. Patrick is expecting oil to fall to $85-$90 within the next few weeks.

    New York oil for July delivery is currently $93.65, down $1.30 today. I believe this is the lowest oil has been since February.

    New York gasoline for July delivery is currently $2.9332, down 1.62¢ today.

    Chicago gasoline hasn’t updated today yet.

    Retail prices in Kalamazoo fell to $3.589 this morning.

  7. Prices on and near S. Westnedge Ave. in Kalamazoo and Portage dropped 8¢ today to $3.509, including 3 Speedway stations. These are 7 of the 15 lowest priced stations currently reported in Michigan.

    Otherwise, Speedway prices in Southwest Michigan currently range from $3.589 (at 9 locations) to $3.799 at both locations in Coldwater.

    In Grand Rapids, the lowest currently reported price is $3.569 at a Speedway on 52nd St. and Eastern Ave.

    Current metro averages:

    $4.109 Chicago (still #1 highest, but may soon fall below Anchorage)
    $3.786 Ann Arbor
    $3.719 Michigan
    $3.680 Grand Rapids
    $3.661 USA
    $3.627 Kalamazoo (same as Midland Odessa, Texas)
    $3.600 Indiana
    $3.596 South Bend
    $3.593 Lansing ($3.479 at Sam’s Club, $3.499 at Speedway)
    $3.571 Fort Wayne
    $3.496 Ohio (8th lowest state)
    $3.420 Toledo (lowest in the Great Lakes)
    $3.293 Spartanburg, S.C.

    I’m going to stick with my date of Wednesday, June 22 for a reset to $3.659. This is the fun kind of prediction, because we win if it’s wrong.

  8. The price at a station I monitor in Kalamazoo fell 24¢ last week ($4.099 on Sunday, June 5 to $3.859 on Sunday, June 12) and another 26¢ this week (to $3.599 on Sunday, June 19), for a two-week drop of 50¢. That’s an average drop of 3.57¢ per day.

    Using GasBuddy’s numbers, the average price in the Kalamazoo metro. area has fallen 24.4¢ over the past week, from $3.852 to $3.608. So, the station I monitor is very reflective of average prices in the area.

    Ohio ($3.482) has fallen to the 7th lowest prices in the nation. Toledo, Ohio ($3.404) has fallen to the 10th lowest metro. in the nation.

    Chicago no longer has the highest metro. average gas prices in the nation. That honor now goes to Santa Barbara, California, where GasBuddy reports their prices went up an average of 13.4¢ in the past 24 hours to $4.152. Chicago now has the 3rd highest gas prices in the nation, one of only 5 metros with averages above $4. Average prices in Salinas, California went up 13.8¢ in the past 24 hours.

    Here are some relevant articles published on Friday:

    * Crude Oil Falls to Near a Four-Month Low on European Debt Crisis, Economy http://www.bloomberg.com/news/2011-06-17/crude-oil-falls-to-near-a-four-month-low-on-european-debt-crisis-economy.html

    * Goldman Sachs Said to Open Physical Commodities Trading Office in Houston – Physical commodities trading will include crude, refined products, natural gas liquids and coal, the person said.

    * U.S. Oil Supply Highest for May Since 1980, API Says – Demand for gasoline declined 0.7 percent from May 2010 to 9.16 million barrels a day, a two-year low. Gasoline production was 2 percent higher than in May 2010 at 9.37 million barrels a day, a record for any May and the highest level this year.

  9. Sucks to be in Battle Creek.

    Gas prices there currently range from $3.709 at a Sam’s Club to $3.799 at 5 stations.

    Meanwhile, in the Kalamazoo metro area, all reported prices are below Battle Creek’s lowest price, except for possibly the Shell in Galesburg at $3.759, though that price is from 9:30 a.m. Saturday.

    All Battle Creek prices are above the Michigan average of $3.709, except for Sam’s Club which is at that price.

    What makes this further interesting is there is a fuel terminal in Marshall, only 12.8 miles away from Battle Creek, assuming that terminal is still in operation. That Marshall terminal is also closest to Kalamazoo, but 35.6 miles away. The next closest to Kalamazoo after that are Holland (49.8), Elkhart, IN (58.8), Niles (59.6), and Granger, IN (61.0).

    It’s my understanding that this is typical, that Kalamazoo prices are always lower than Battle Creek.

    I note that both Lansing and Traverse City have terminals and those cities often come up as among the lowest in the state. The terminals in both those cities are Marathon’s. The closest Marathon terminals to Kalamazoo and Battle Creek are probably the ones in Niles, where there are two of them, among a cluster of 5 terminals.

  10. In Fort Wayne, just a quick look at Gasbuddy shows that the rate of prices falling today are slowing down a bit. I know the Near West State Bl pricing is $3.48, Sams is $3.45, and when I left home, Leo, IN, BP was $3.57. Some stations have a ways to go. But it also seams like RBOB is holding around the $2.92 per gal even though the Crude WTI prices have fallen down to the Upper $91/Lower $92. Things have got to be getting tight here in town at the retail pumps. The wife visited Defiance on Friday, and gassed up for $3.39. Indiana loves it’s fuel taxes. Reset Soon?

  11. Chicago gasoline dropped another 3.950¢ (1.413%) today to $2.7565.

    New York gasoline settled down 3.45¢ to $2.9115.

    New York oil settled up 25¢ to $93.26. – Crude Oil Futures Increase in New York as Juncker Eases Greek Debt Concern http://www.bloomberg.com/news/2011-06-20/crude-oil-falls-in-new-york-approaching-a-bear-market-as-2011-gain-erased.html

    Now would be a great time to go to Cedar Point, as Toledo has the 5th lowest metro. average gas prices in the nation, $3.372.

    In Kalamazoo, prices on S. Westnedge Ave. fell 4¢ this morning plus another 5¢ this afternoon to $3.419. These decreases are being lead by the Admiral station, and followed by Meijer, 3 Speedways and a Rich, which Speedway also owns. The Kalamazoo metro average is currently $3.570. Excepting S. Westnedge Ave. and 2 locations at $3.439 on Portage Rd. in Portage, Speedway prices in southwest Michigan range from $3.529 on Kalamazoo’s west side and Gull Rd. to $3.779 in Bangor and 2 locations in Coldwater.

    Nine of the 15 lowest and 6 of the 7 lowest prices in Michigan can currently be found in Kalamazoo, Portage, and Richland.

    In Grand Rapids, the lowest non-membership club price is $3.569 at 8 locations, 5 of which are in Byron Center and 2 in Kentwood.

    Current metro averages:

    $3.735 Ann Arbor
    $3.692 Michigan
    $3.685 Detroit
    $3.665 Gary
    $3.650 USA
    $3.634 Grand Rapids
    $3.631 Flint
    $3.570 Kalamazoo
    $3.568 South Bend
    $3.565 Lansing
    $3.562 Indiana
    $3.524 Fort Wayne
    $3.474 Cleveland
    $3.460 Ohio
    $3.431 Dayton
    $3.409 Akron
    $3.408 Columbus
    $3.372 Toledo

  12. Great article explaining the drop in RBOB in Chicago, and the expected summer pricing of gasoline.
    http://www.cnbc.com/id/43469708

  13. The Admiral on S. Westnedge Ave. in Portage has dropped (7:39 a.m.) its price another 2¢ this morning to go to $3.399, 4.37¢ below yesterday’s spike line.

    As of this moment, neither the nearby Meijer or Speedway/Rich stations have responded, but they should soon. The current Kalamazoo metro average is $3.551, which will drop once the 5 other Westnedge area stations respond. Kalamazoo is now the lowest metro. in Michigan, with Lansing second at $3.567. Detroit is now the highest metro. in Michigan with an average of $3.668.

    The lowest reported non-membership club price in Grand Rapids continues to be $3.569, except now that price is available at more locations. The Grand Rapids average is $3.619.

    The statewide average for Ohio has gone up 2.5¢ in the past 24 hours and they have risen from the 7th lowest in the nation to the 10th lowest. Toledo ($3.352) remains the 5th lowest metro. in the nation. Akron ($3.363) has fallen to the 7th lowest metro. in the nation. Columbus ($3.399) is the 12th lowest metro. in the nation. Cleveland ($3.492) is the highest metro. in Ohio and experienced and an average increase of 2.5¢ over the past 24 hours.

    Chicago is back on top as the highest metro. in the nation, $4.110.

  14. For a while it looked like Speedway/Rich and Meijer weren’t going to match Admiral’s $3.399 in Portage. I checked several times all morning and Speedway stuck with $3.419 until possibly as late as 1:35 in the afternoon. The Kalamazoo average is now down to $3.542.

    Kalamazoo and Lansing are battling for the lowest prices in the state. Kalamazoo, Portage, and Richland are winning with 7 of the lowest 15 prices, while Lansing has 5 of the 15. Surprisingly, 2 of the 15 lowest are in L Anse and Baraga in the upper peninsula. The lowest continues to be a Kroger in Lambertville at $3.169. Lambertville is near the border with Toledo, where such prices are common. That Kroger is apparently the only place in Lambertville that sells gasoline.

    Ohio has dropped back down, lower than they were before, to 4th lowest in the nation.

    At 2:34 p.m. ET, the Chicago spot was down 0.65¢ to $2.75.

  15. Can we get 3 full weeks without an increase? It’s getting really close now.

    Patrick reports the prices in Toledo are the lowest in the nation. The lowest there now are two stations at $3.099. Among the 10 lowest metros, I don’t see any with prices below the lowest in Toledo. Three cities in Ohio are currently among the 10 lowest in the nation: Toledo (5), Akron (7), Columbus (9).

  16. Speedway is resetting to $3.699 this morning in Michigan. That is an increase of as much as 31¢ in Kalamazoo and 36¢ in Lansing.

    We had a good run. Prices have fallen nearly every day since Wednesday, June 1, over 3 weeks. In Kalamazoo, the drop was as much as 71¢ from $4.099 to as low as $3.389.

  17. Speedway moved earlier today than normal, with the earliest report in Holland at 9:48 a.m.

  18. ChrisDG74, Cincinnati, OH

    I see that Greedway’s jumping in Michigan. Nothing here in Ohio yet. Very interesting, with RBOB taking a dump so far today. The call must have come last night. I wonder how long that spike price will last.

  19. The increases are reversing, quite an unusual morning.

    Just as prices were beginning to go up all across Michigan, the International Energy Agency said its members would release crude from strategic reserves.

    This has caused the Chicago spot to fall 15.85¢ (5.609%) to $2.6673, as of 12:59 p.m. ET.

    New York gasoline is currently down 11.84¢ this morning to $2.8549. New York oil is currently down $4.08 to $91.33.

    Here’s an article about the IEA action:

    http://www.bloomberg.com/news/2011-06-23/crude-oil-tumbles-to-a-four-month-low-after-iea-says-it-will-tap-reserves.html

  20. I didn’t even know there was an attempted increase to $3.69, it happened so fast.

  21. There were at least 10 stations in the Kalamazoo area that went up to $3.699 on Thursday morning from about 10 a.m. to 2 p.m., all Speedways. I did not see in Kalamazoo or anywhere else in the state any non-Speedway stations going up. There was one Speedway in Portage that apparently didn’t get the message to go back down, as it was still being reported at $3.699 into the early evening.

    The brief increase to $3.699 wasn’t just a Kalamazoo area event. Speedways all across the state were reported up to that price (though there were a few in northern Michigan, like Gaylord, that hadn’t yet fallen to that price).

    If you only looked at Speedway’s website, you would have never known about the increases, because their website didn’t update all day, for whatever reason. The entire time the site reported the pre-increase prices. Normally, there is an about 1 hour delay between stations starting to go up and it being reflected on Speedway’s website.

    This event gives us a little window into Speedway’s pricing decisions, as stations were going up by 9:48 a.m. The question is at what time does Speedway send the messages to their store managers? The night before or the day of? Just at the time the street level increases were beginning to occur, news of the IEA action was breaking.

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