Month: April 2012

That Was An Unusual Price Hike on Thursday, to $3.89

Comment on the April 11 prediction:  Prices rose to $3.99 on Friday the 13th, not Thursday the 12th, so I am going to grade this 3/4 CORRECT, 1/4 WRONG.  Then, prices drifted lower for two weeks, until Thursday’s re-set to $3.89.

Saturday, April 28, 2012, 8:20AM:  For educational purposes, let’s take a look at Thursday’s price hike.  Completing my Gas Game spreadsheet Wednesday night, I had recorded a NYMEX price of $3.14 (averaging the current and next month’s futures price) and a Chicago wholesale price estimate of $3.00 per gallon.  These days, I tend to use the Chicago estimate, and it corresponds to an estimated price to retailers of $3.70.  Historically, retailers have gone to as low as 10 cents below current cost before initiating a price hike, and then they usually hike to 10 cents above cost (what I used to call the 20-cent margin price).  So, the price hike was a bit of surprise to me, as I was recording prices in the $3.70’s in Grand Rapids, and the upper $3.60’s in Fort Wayne, and the hike was to $3.89 (kind of a 30-cent margin price).  It is as if the Chicago wholesale price was $3.10, not $3.00.  Further evidence that this was an unusual price hike includes the following:  (1) as reported on this site in the comment sections, some non-Speedway retailers were rather slow to agree to the hike; (2) retail prices in Fort Wayne have already dropped at least 6 cents a gallon, and they are at $3.72 a gallon on Fuller Street in Grand Rapids; (3) my brother called from Fort Wayne and complained about Thursday’s hike, which he rarely does.

Looking to next week, wholesale prices jumped a bit on Friday, and retail prices are already all over the place.  That feels like one of those situations where some time next week, there will be a price reset ($3.89 again?) that all the stations agree to almost immediately.  I’m sure the secret e-mail will say, “No fooling around this time.” -Ed Aboufadel

Top-off-the-tank Thursday, and a Stink Eye at the Banks

Comment on the March 26 prediction:  Prices rose to $4.15 the next day in Michigan, then fell to $4.09 on the 28th while they rose to $4.09 in Indiana.  Sounds like a pretty much CORRECT prediction.

Wednesday, April 11, 2012, 10:00PM:  It appears that Chicago wholesale prices fell dramatically last week, which has led to retail prices falling from $4.15 to $3.79.  But, we got a jump today of 13 cents wholesale, and that is a set up for a price hike.  That, and I have to drive tomorrow to Lansing and back.  We could re-set to as much as $3.99, but not above it.

This week, I was contacted by the National Association of Convenience Stores. They have written a position paper, “The Banks’ Hidden Windfall As Gas Prices Rise“, and because I agree with their conclusions, I wanted to let readers know about it.  I don’t have any relationship with this organization, though.  –Ed Aboufadel

No post tomorrow due to holiday — market update

For those that watch The Spike Line or Today in Oil, tomorrow is Good Friday, and there will be no market trading in Chicago, so I will not be updating them. Have a good weekend and a Happy Easter!

Speaking of the market, You may have noticed that oil and the Chicago spot both fell this week. The Chicago Spot fell just in time, as we were ripe for a spike today if it hadn’t. We are down more than 25¢ since Monday, and oil is down almost two dollars after the one dollar rally up today.

That leaves us with a very big cushion going into this weekend. Hold off on gas because it should fall this weekend.

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