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

Posted in Commentary, Predictions
12 comments on “That Was An Unusual Price Hike on Thursday, to $3.89
  1. The Real Truth says:

    In Sidney on 25-A there is a Clark station that stayed at $3.55 while all of the other stations in town, lead by Speedway are at $3.79 – $3.78… What kills me is, these other stations have customers!

  2. ChrisDG74, Cincinnati, OH says:

    In the northern suburbs of Cincinnati, OH, there are a lot of stations that never went up. I fact, some have even gone DOWN since Thursday.
    The Kroger closest to my house has dropped a penny each day, from $3.60 Friday to $3.57 as of 6:45am today. Of course, all of the closest Speedways are $3.78-$3.79.

  3. Diether Haenicke says:

    Here is a comparison of the slow moving Kalamazoo stations from Friday morning to the most recent report:

    * Quick Stop, Portage St. at Stockbridge – was $3.759 at 7:03 a.m. Friday – now $3.799 at 7:55 a.m. today (Monday)

    * CITGO, Burdick at Alcott – was $3.799 at 7:25 a.m. Friday – not updated since

    * Marathon (formerly Clark), Portage St. at Bryant – was $3.799 at 7:25 a.m. Friday – now $3.829 at 10:38 a.m. Saturday

    * Shell, Cork Valley – was $3.799 at 6:37 a.m. Friday – now $3.879 at 10:33 a.m. Saturday

    The Kalamazoo average is $3.826 with the lowest price $3.759 on Portage St./Rd., set by the Circle K BP.

    The Grand Rapids average is $3.809. Excluding Sam’s Club in Kentwood ($3.679) and Costco in Cascade ($3.689), $3.699 is still the lowest price in Grand Rapids, available at 4 locations near the Circle K on 44th & Eastern plus the Quick Stop in Hudsonville.

    The Michigan average ($3.814) is currently ABOVE the national average ($3.809).

    The final (4:25) update in the Chicago spot is up 6.01¢ (1.96%) to $3.1196. Excluding the rack adjustment, that puts the Michigan spike line at $3.831816. Including last week’s huge -22.02¢ rack adjustment, the Michigan spike line would be $3.611616. I’m guessing $3.699 is closer to the real spike line.

    Patrick reports today: “Tomorrow is the day that all gasoline terminals must only be supplying summer gasoline. Retailers have until June 1 to do so. Don’t expect an increase in price- we’ve already priced in the switchover.”

  4. Aaron W. says:

    I guess I didn’t see this one coming. A hike to $3.999 is in progress. The prices for stations that have, as I like to call it, “taken the plunge”, have been reflected on Speedway’s website.

  5. ChrisDG74, Cincinnati, OH says:

    $3.899 rolling Greedway spike in Ohio.

  6. Sam says:

    Hmmmmm, hike to $3.89 last week and $3.99 this week!! Glad I filled up last night for $3.67. I can wait almost 2 weeks now for a fill-up.

  7. ChrisDG74, Cincinnati, OH says:

    That $3.579 yesterday morning sure is looking good now.

  8. Andrew says:

    There was a gas hike in Traverse City, MI today from $3.749 to $3.999. The leader of the pack to raise prices was Speedway.

  9. Diether Haenicke says:

    I don’t know what the Chicago spot was on May 1, but right now it is down 11.82¢ (3.89%) to $2.9225. That puts the Michigan spike line at $3.62289 (or $3.36549 if the increasingly irrelevant rack adjustment is included, -25.74¢ this week).

    If there was any legitimacy for yesterday’s reset, it was a one day Chicago thing, as New York is currently down 2.57¢ and has closed down every day this week (settlements of -2.18¢, -2.75¢, and -2.14¢). New York WTI June crude oil is currently down $2.68 to $102.55. Every contract through March 2013 ($105.91) is higher than the preceding month. December 2020 oil is currently $85. If you think oil will be a lot higher than $85 in late 2020, here is an investment opportunity for you (though you will be one of those greedy speculators you are always complaining about).

    Regarding yesterday’s reset, Patrick wrote: “I can’t justify it”

    Retail prices in Kalamazoo are already down 10¢+ at 7 locations plus $3.789 at the Sunoco (formerly Frontier Gas) in Pavilion Township, reported at 11:11 a.m. today. It is possible that Sunoco never bothered to go up. The Kalamazoo average is $3.972.

    In Grand Rapids, stations are as low as $3.679 at 2 locations (Admiral, Wesco) in Sparta. Excluding membership-only warehouses, 7 stations are reported today at $3.739–$3.779. The Grand Rapids average is $3.97.

    Thanks to Admiral, Sturgis has the 6 lowest prices in Michigan, ranging from $3.489 to $3.589. The Michigan average is $3.921, 33.6¢ lower than the $4.257 it was one year ago. AAA lists tomorrow (May 4) as the all time average high price for Michigan, set in 2011: $4.259

    Tomorrow is also the AAA all time price peak for every Michigan metropolitan area they cover, except Jackson ($4.286 on 5/5/2011) and Marquette ($4.307 on 5/13/2011), including:

    – Grand Rapids-Muskegon-Holland ($4.282 on 5/4/2011)

    – Traverse City ($4.279 on 5/4/2011)

    – Lansing-East Lansing ($4.278 on 5/4/2011)

    – Benton Harbor ($4.273 on 5/4/2011)

    AAA doesn’t cover Kalamazoo. Somehow, the much smaller Benton Harbor was selected to represent southwest Michigan.

  10. Diether Haenicke says:

    Bloomberg’s mid-afternoon (2:44) update puts the Chicago spot down 15.65¢ (5.15%) to $2.8842.

    There are now 10 Kalamazoo area stations reported $3.899 or below, plus the Sunoco in Pavilion Township at $3.789.

  11. Jim says:

    Diether, Does this mean that you would think prices should fall pretty quickly if the spot fell that much?

  12. Sandi says:

    National news reporting gas prices going down. But in GR area they’re going up! Cripes a barrel of oil is around $85 right now…way to rob the public.

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