Comment on the August 2 prediction: A heaping pile of WRONG, as prices jumped to $3.89 on August 3. We had another re-set this past Friday to $3.75.
Monday, August 15, 2011, 11:40AM: I’m back from traveling to Kentucky and Traverse City. In ten years of the Gas Game, it seems like August is more likely than not the worst month of the year for gas prices. It is usually a combination of higher demand for gasoline due to vacations, surprise shortages due to hurricanes and refinery fires, and the “summer rally” on Wall Street. This year, I haven’t seen evidence for shortages, and we’ve seen the stock market sell off sharply the past few weeks. That sell-off has affected oil prices, but not wholesale gas prices. For instance, according to the Bloomberg page for wholesale gas prices, we were at $3.02 on July 28, and only $2.82 on August 10. At the same time, wholesale prices have not been going up. So what I see about this price hike on Friday is that (1) Speedway and friends are trying to increase their margins (more like 30 cents than 20 cents in the formula on the Gas Game web site), (2) because the hike isn’t based on a wholesale spike, it hasn’t held in some areas ($3.50’s in Standale this morning). Going forward, I estimate the 0-cent margin price to be about $3.45, so that’s our floor for prices right now. You can buy gas for $3.50 in Cedar Springs, $3.53 in Standale, $3.66 on 28th street, and $3.75 in places that hiked on Friday and haven’t corrected yet. So, I predict that we should see prices drift into the $3.50’s most everywhere this week, unless we get a wholesale spike that I am unable to predict. If so, all bets are off. — Ed A.