Raise ’em when you can; drop ’em when you have to

Comment on Monday’s posting:  A second WRONG in a row, as prices re-set on Wednesday to $3.69 in the Grand Rapids area.

Thursday, August 18, 2011, 1:50PM:  Yesterday’s price hike was not related to wholesale spike, just someone at Headquarters wanting to get those margins back up again.  As I noted the other day, it looks like we are seeing more aggressive pricing this month to increase margins.  Sorry for the WRONG prediction.  Of course, the day after the hike, we have a harsh decline in the stock market, which means wholesale prices are also falling.  At the moment, the Gasoline ETF with symbol UGA is down 3%, so that would translate to about a 10 cent drop in wholesale prices.  So, retail prices will be down a dime tomorrow, right?  Maybe — I see we are $3.61 in Jenison this afternoon.  The point is there is now pressure on retail prices to go lower the next few days.

Updated: August 18, 2011 — 12:56 pm

20 Comments

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  1. Why are gas prices currently so disconnected from oil prices? 3 years ago, when gas was $4.25/g, oil was about $140/b. When oil was $80, I believe gas was about $2.50/g. Anyone have a chart of this?

    Did the cost of refining increase substantially? No, and in fact, we should be doing it cheaper now than we were then. So… What’s going on?

  2. Good question, Jeremy. I don’t know the answer, but I can tell you that it is not the case that the retailers have doubled their profit margins. So the price increase must be occurring at the refinery level.

    Here are some numbers for you:

    July 3, 2008 oil: $145.39, retail gas: $4.11
    Dec. 19, 2008 oil: $33.87, retail gas: $1.55

    May 2, 2011 oil: $113.52, retail gas: $4.29
    Aug 18, 2011 oil: $82.38, retail gas: $3.63

    I suspect the way to think about this is, when oil was $140 a gallon, gas at $4.11 was a relative bargain, and we were lucky the price didn’t go higher.

    The stock in Tesoro (TSO) suggests that refiners are doing welll.

  3. I’m expecting Speedway to begin resetting to $3.799 in about an hour (in Michigan’s lower peninsula). In southwest Michigan, they are currently $3.509 (4 locations Kalamazoo/Portage, 1 location Sturgis) to $3.699 (2 locations Paw Paw, 1 Mattawan, 1 Dowagiac). There are no locations of any brand in the Kalamazoo/Plainwell/Paw Paw area reported above $3.699. The Kalamazoo average is $3.611, only 1.41¢ above the $3.5969 spike line.

    In Grand Rapids, the lowest price is $3.489 near the usual hot spot of 44th St. and Eastern Ave. in Kentwood, though the Circle K is reported at $3.499 while 2 Speedways are $3.499 and 1 Speedway is $3.489. All stations in Grand Rapids are reported at $3.699 or below, except for $3.749 at Mobils in Rockford and Cedar Springs. The Grand Rapids average is $3.631. The AAA average for Grand Rapids-Muskegon-Holland is $3.627.

    The lowest prices reported in Michigan are $3.409-$3.419 in Saginaw and Freeland. There are 5 Admiral stations among these, 4 in Saginaw and 1 in Freeland. This continues Admiral’s habit of selecting a different area of the state every other week (or so) in which to loss lead. The Michigan average is $3.647. AAA calculates a state average of $3.657.

    The USA average is $3.587. AAA comes up with $3.569.

    As far as Speedway updating the prices on their website, I’ve said before that it is not real time and the new, higher prices are usually reflected about 10:45-10:50 ET, about an hour after the new prices start hitting the street. I think I hit their website this morning during an update. At 8:46 this morning, all their prices briefly read “N/A.” So, they probably update their website every 2 hours, on the even numbered hours ending :46, which is consistent with my past experience.

    September gasoline futures are down 4.96¢ this morning to $2.7916. October futures are down 4.57¢ to $2.6705. September oil is up $1.97 to $84.23.

  4. 10:02 a.m. – Scottsburg, Indiana – Speedway up to $3.759

  5. Unless Athens (10:07), Elida (10:05), Chillicothe (10:02), and Garrettsville (9:42) are all near each other, Speedway may be going to $3.659 this morning in Ohio.

  6. Confirmed $3.759 in Indiana and $3.659 in Ohio.

    Nothing on Michigan yet.

  7. It took much longer than normal (possibly the longest ever), but Speedways in Michigan finally began going up to $3.799 by 10:34 a.m.:

    10:34 a.m. Lansing – E. Saginaw St.
    10:36 a.m. Oshtemo Township (Kalamazoo) – S. Drake Rd.
    10:43 a.m. Holland – 120th Ave.
    10:44 a.m. Battle Creek – E. Michigan Ave.
    10:45 a.m. Lansing – N. Cedar St.
    10:47 a.m. Novi – 31275 Haggerty Rd.
    10:47 a.m. Novi – Novi Rd.
    10:47 a.m. Novi – 21070 Haggerty Rd.
    10:47 a.m. Novi – Pontiac Tr.
    10:48 a.m. Portage – Milham
    10:50 a.m. White Pigeon
    10:51 a.m. Shelby Township
    10:52 a.m. Kent City – spotted by jimmerMI
    10:52 a.m. Cedar Springs – spotted by jimmerMI
    10:56 a.m. 1533 Leonard St. NE – spotted by jimmerMI
    10:57 a.m. 1212 Michigan St. NE – spotted by jimmerMI
    10:57 a.m. Rochester Hills – Crooks Rd.
    10:57 a.m. Wyoming – 1300 Burton St. SW – spotted by jimmerMI
    10:58 a.m. Lansing – 2558 E. Jolly Rd.
    10:58 a.m. Wyoming – 2360 28th St. – spotted by jimmerMI

    As of 10:48 a.m., these new prices were on Speedway’s website, as expected. I’m suspicious about the reports from jimmerMI. They all occurred after the Speedway site update and are only of the locations reported up on Speedway’s website. It appears jimmerMI is not reporting street prices, but re-reporting what is on Speedways website. If you go to Speedway’s website right now (11:08 a.m.), only 2 of 11 stations in Grand Rapids are listed at $3.799. The 2 stations listed at $3.799 are the exact same ones reported by jimmerMI. This also confirms what I’ve always said about Grand Rapids Speedway prices: they take longer to go up than every where else in west Michigan. Because Speedway waited so long to go up, today isn’t a good example, but here are the cities currently showing lower prices on Speedway’s website (out of 290 locations in Michigan):

    616: Grand Rapids (9), Jenison (2), Comstock Park (2), Kentwood (2), Grandville (1), Lowell (1), Wyoming (1)

    231: Cadillac (2), Fremont (1)

    269: Sturgis (1)

    517: Lansing (10), De Witt (2), Bath (2), Jackson (1), Mason (1), Eaton Rapids (1)

    989: Midland (6), Saginaw (5), Alma (2), St. Johns (2), Caro (2), Grayling (1), Oscoda (1), Essexville (1), Bay City (1)

    810: Port Huron (1), Algonac (1), Burton (1)

    248: Lake Orion (1)

    As of 11:47 a.m., all of these lower prices are still being displayed. I imagine they will reflect the correct prices after the 12:46 p.m. update.

  8. As of 12:46 p.m., Meijer has not yet sent an alert by tweet, Facebook post, or text message.

    So far, only 1 Meijer in Michigan is reported at the new price:

    * 11:07 a.m. Rochester Hills, 2450 S. Adams Rd.

    Several times before, I have noted that particular Meijer as being far and away the first in Michigan to go up:

    JUN 30 2011 – “The Meijer on W. Main St. in Oshtemo Township (Kalamazoo) matched the west Michigan Speedway price ($3.759) by 11:08 a.m. A Meijer in Rochester Hills matched the east Michigan Speedway price ($3.859) by 11:08 a.m.”

    JUL 5 2011 – “The first Meijer in Michigan reported to have matched this morning’s Speedway increase was in Rochester Hills at 12:37 p.m.”

    JUL 12 2011 – “Again, the Meijer in Rochester Hills was the first in Michigan to match the new Speedway price, as reported at 12:12.”

    JUL 26 2011 – “Only 3 Meijer stations in Michigan so far are reported up to $3.859: 11:29 a.m. Comstock Township (Kalamazoo), Gull Rd., 12:00 p.m. Rochester Hills, 1:02 p.m. Royal Oak”

    Meanwhile, a few Admiral stations in Michigan have gone up:

    11:17 a.m. – $3.789 – Bay City, S. Euclid Ave.
    11:22 a.m. – $3.799 – Lake Orion, 799 S. Lapeer Rd.
    12:33 p.m. – $3.799 – Williamston, 1100 W. Grand River Ave.

  9. It’s 1:44c p.m. Speedway’s website still shows 9 of 11 Grand Rapids stations at the same prices they were before this morning’s statewide increase to $3.799. So, instead of those stations being slow to update, I think those stations aren’t going up at all. That means all this time when I’ve thought Grand Rapids area stations were slow to update, they simply weren’t going up at all. Every single station I listed previously is still at the lower prices. Within those west Michigan (616, 231, 269) cities listed, here are the locations that DID go up:

    * Wyoming, 2360 28th St.
    * Wyoming, 4390 Byron Center Rd.
    * Wyoming, 1300 Burton St. SW
    * Wyoming, 3605 Burlingame
    * Grand Rapids, 1533 Leonard
    * Grand Rapids, 1212 Michigan
    * Kentwood, 5173 Broadmoor Ave. SE

    There are only 5 Speedways in area code 313 (1 each in Redford, Taylor, Detroit, Dearborn Heights, and Dearborn). All of them went up to $3.799 according to Speedway’s website.

    There are 30 Speedways in area code 734. 100% went up to $3.799 according to Speedway’s website.

    It’s also 100% up for the 29 Speedways in area code 586.

    Out of 31 Speedways in area code 248, 1 location in Lake Orion was the only one not to go up.

    There are no Speedways in the upper peninsula, area code 906.

    No additional Meijer or Admiral stations have gone up yet. Of the 3 Admirals that did go up, the one in Lake Orion had gone back down to $3.519 as of 12:54.

    In the Grand Rapids area, the only new station (other than Speedway) above $3.699 is Green Lake One Stop in Caledonia at $3.739. However, that might be an outlying station that has been at that price all along.

    Only two non-Speedway stations in the Kalamazoo area have moved so far:

    12:54 p.m. – $3.759 – Parchment Party Store
    1:16 p.m. – $3.799 – W. Main St. Shell

  10. Finally, more stations in Kalamazoo/Portage are responding:

    1:56 Citgo, “I-94 & 9th street” (probably means Stadium Dr. at 9th St.)
    1:56 BP, S. 9th St.
    2:03 BP, Oakland Dr.
    2:14 BP, Stadium Dr.
    2:22 Shell (Bob & Kay’s), Stadium Dr.
    2:22 BP (Circle K), Portage St.
    2:34 BP, downtown
    2:34 Shell, downtown

    Speedways didn’t uniformly go up in the Grand Rapids area, so there is only 1 additional competitor reported as responding:

    2:23 Mobil, Wyoming, Byron Center Ave. SW & Gezon Pkwy SW

    The Meijer in Rochester Hills is still the only one in Michigan reported up. Further, 2 Meijers in Saginaw now have the lowest prices in the state: $3.379 and $3.389. It is late enough now that Meijer is probably not going to go up at all. They probably want low prices to drive back to school shopping, which is about tied with Xmas season for top sale annually.

    No additional Admirals are up. Most Admirals in the state are $3.599 or below, below the spike line from Friday, though Chicago spot gasoline is down 1.67¢ since then.

  11. In 4 Southwest Michigan communities, Speedway is already self-reporting retreats from their increase today:

    Allegan, 2 stations, down to $3.589
    Battle Creek, W. Columbia, down to $3.679
    Schoolcraft, down to $3.689
    Bangor, down to $3.759

    3 more Speedways and 1 Rich in Kalamazoo/Portage will fall from $3.799 soon as the Admiral in that area has gone from $3.509 to $3.479 this afternoon.

    The only Meijer in Michigan that was reported up, Rochester Hills, is reported down to $3.639 at 3:44.

    Without support from Admiral or Meijer, we’ll count this as another failed attempt by Speedway. I imagine they’ll try again Thursday.

  12. I got a meijer text alert at 5:14pm saying gas could rise by 8 am Tues.

  13. ChrisDG74, Cincinnati, OH

    Just an FYI on Ohio (SW Ohio anyway). As of 3pm yesterday, only 6 of 22 Speedway stations had jumped in the 452xx area code. As of right now, that number is still 6. None of the other brands made the jump(or at least jumped and stayed – I have seen a Kroger go up and come right back down) – yet.
    Speedway led 2 previous failed spike attempts to $3.659 in the last 2 weeks or so. Hopefully, this 3rd one WON’T be the charm.

  14. I wonder if the somewhat leveling out of crude and of the wholesale costs of gasoline hasn’t placed the retail stations in a position where they don’t have a need to follow Speedway’s pricing any longer.
    Just a thought.

  15. According to the US Energy Information Administration, in the second week of August, US spot crude (WTI) cost $82.86/barrel. The average pump price for gasoline was $3.73/gallon. In the second week of October 2010, spot WTI crude cost $82.29/barrel, and the average pump price was $2.87/gallon.

    In the same week, Brent crude sold for $84.51/barrel, only a slight differential to WTI. Based on historical pricing, US consumers should be paying less than $3/gallon at the pump today. We are not because of the wide differential between Brent and WTI crudes.

    Here’s the link!
    http://247wallst.com/2011/08/22/libyan-events-could-finally-lower-pump-prices-xom-bp-cvx-cop-vlo-tso-mpc-wnr/

  16. Great information Sam! I’m not sure I understand it all, though. LOL

  17. It’s just “this week’s story” on why gas prices are so high when they don’t need to be. Next week it will be something else – LOL!

  18. Out of 31 Speedway/Rich stations in Kalamazoo, western Calhoun, Van Buren, Allegan, Branch, Saint Joseph, Cass, and northern Berrien County, only 7 are still self-reported at $3.799, with Vicksburg and Comstock being the Kalamazoo County locations. Four stations are $3.669 to $3.689. Nine stations are $3.589 to $3.599. Sturgis is at $3.509. Westnedge Ave. is the lowest at $3.479. The average of all these stations is $3.669, 7.95¢ above yesterday’s spike line.

    While Speedway’s action briefly moved the Kalamazoo area average up by about 11.9¢ yesterday (it’s down 3¢ since then), the Grand Rapids average barely moved, up only about 4/5¢. Speedway was able to move the Michigan average up 4.9¢ over the past 24 hours. The U.S. average is down 1/5¢ over the past 24 hours to $3.585.

    Meijer did indeed send a text message late yesterday: “Meijer Gas Alert! Mkt cond. are changing fuel cost. Fill up @ Meijer as we expect gas prices will increase by 8am on Tues. Info 800-313-2912. End: ENDGAS”

    Here are the first Meijer stations in Michigan reported up to $3.799:

    7:57 Battle Creek, W. Columbia Ave.
    8:03 Fort Gratiot, 24th Ave.
    8:30 Northville
    8:31 Flint, W. Hill Rd.
    8:51 Oshtemo Township (Kalamazoo)

    However, Meijer didn’t uniformly go up to $3.799. While there are 16 locations freshly reported at that price, 22 locations are freshly reported at $3.759.

    In the Kalamazoo area, while stations were at $3.799, it was the first time in quite a while diesel was at the same price as regular unleaded.

    Here’s a good thread about E-10, what we now call regular unleaded gasoline:

    http://www.facebook.com/photo.php?pid=9887092&l=bffad1fbf5&id=105159112872

  19. It seems pumps containing gasoline blended with ethanol used to be labeled. I’ve looked around and don’t see those labels anymore.

    Of the 12 states that do not require pumps to be labeled, 4 of them are the major Speedway states: Indiana, Kentucky, Michigan, Ohio. Illinois and Wisconsin require these pumps to be labeled, so this isn’t a Great Lakes thing. You’d think Speedway was involved in making those E-10 stickers not required.

    http://www.fuel-testers.com/state_guide_ethanol_laws.html

  20. Gas prices in southeastern Michigan seem to be bouncing like a basketball. They range from a low in Waterford of 3.599 to a high of 3.799.

    Makes one wonder what the heck is going on.

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