Comment on the December 19 prediction: Pretty much CORRECT. We did see several $2.99’s, and then we had a hike, but it was a bit higher than expected, to $3.39.
Friday, December 39, 2011, 8:30AM: Well, we end the year with a loss in the Gas Game, as I did not expect the hike yesterday to $3.49. Bill called it, though! (Gas was still $3.16 at Costco last night, though — did anyone fill up?) Looking over the last two months of data, it appears to me that Speedway and friends are trying once again to improve their margins. To be specific, using the formulas posted on our site, I compute a 0-cent margin price (which is, in fact, a 10-cent below cost price) and when the retail price gets near or below the 0-cent price, we see a hike that gives us the 20-cent price. In October and November, hikes were improving margins to a 25-cent price, and in December it appears that we rising to a 30-cent price (about 20 cents above cost). We have seen for more than a decade, though, that reaching for a 30-cent price has been a challenge, as it is easier to competitors to undercut the price. This already happened in Standale this morning, and Speedway on Lake Michigan Drive is at $3.46.
Some facts about 2011 prices: The high price that I recorded for the year was $4.29 on May 2. The low was $2.99 on January 5 and again last week. So, we ended the year about where we started — just like the stock market (surprise, surprise!). Oil per barrel topped out at $114 at the end of April, and got down to $75 at the beginning of October.
Happy New Year!