Comment on the August 22 prediction: The next day, prices rose to $3.95 in Michigan, a little higher than predicted, but basically CORRECT.
Monday, August 27, 2012, 9:50PM: On Friday, you could have bought a share of Apple Computer for $657. This morning, you needed $680 for the same share. That’s $23, or almost 4% higher, and that’s how the stock market works sometimes. The rise in Apple was connected to the Samsung smartphone ruling. Gasoline is also traded on a market, and for the past several years, it has often behaved like Apple. (Regulators, take note!) Today, for instance, traders are treating Hurricane Isaac like Apple’s legal ruling, and Chicago wholesale prices are soaring. I don’t see how we won’t get a hike tomorrow to over $4 a gallon, and I am going to fill up in the morning before it hits. -Ed A.
I say $3.99, for two reasons. One, nobody wants to cross the $4 barrier. Two, not all markets in the PADD II are stuck buying in the PADD II. I believe some will search outside the area for fuel. Some have some stored away, and they know this is but just a blip in the prices, they will go down again. This is what happened last big spike up in Chicago Spot prices. I believe the same is possible today.
It’ll be close, Bill.
Chicago spot now the highest it’s been this year by seven cents. It’s not even close. I think we’ll see $4+. $3.40 basis. Wolverine pipeline likely at $3.45+. Rack? $3.47. Taxes will put it over $4. Maybe not in Indiana, but likely in MI at least.
Seeing reports on news sites that Illinois(not Chicago) has jumped to $4.099 already this morning.
Ohio is only jumping to $3.959 this morning. That still puts us below the Spike Line. I fully expect another spike Thursday, perhaps to $4.199, unless spot prices drop(yeah, right).
$4.099 is indeed the new price here in MI. The Speedway location near Frandor in Lansing was the first to “take the plunge” as I like to call it.
4.09 MI 3.99 IN 3.95 OH
Unlike the stock market when Apple falls 4% in a day, prices at the pumps will take days and days to get back down even if the spot prices fall 4% in a day.
Well, I was right in my area, Ed was right in his. What do we win?
You are 100% correct, Roger.
Let them go for it. At some point they will crash the US economy like they did in ’08.. I can’t help but wonder tho if there is non-economic motivation behind this, as the magnitude of gasoline price hikes since the beginning of the year seem to be way out of proportion to the overall market realities or in my view, outright profiteering.
$4 is the new $3 it seems. If one has money, $4 or $14 is irrelevant. If one is employed and needs to keep working, likewise. Ultimately disposable income will drop sufficiently and consumer spending, fragile as it is, will evaporate. Crash, repeat….
As is typical, the Frandor Speedway location in Lansing (3201 East Saginaw, Lansing) has dropped their price almost 30 cents per gallon (as they often do after being at the hiked price for 6-8 hours or so). With a price of $3.779, the store is a madhouse.
What I’m trying to understand is why Speedway would just send them the update to drop the price. I think they understand that this is one of their highest volume stores.
Regardless of who, whom, where, what there is to blame. The fact is I am tired, bone tired, and mentally bereft with trying to reconcile all the places I am not going, all the family I am not visiting, all the help I am not giving people because I can’t afford the $4.00 gas. I started cutting back on travel when gas got to $2.59. There is no more for me to cut back on. When I was in high school, $4.00 bought me 12 gallons and filled my Corvair’s tank. I drove for a week and a half. I know prices can’t stand still. But come on. How long can Middle America last, with its rural areas spending so much on Gasoline and Diesel. My brother is a family farmer. His costs for everything are so nasty due to energy. Sorry, just a rant.
Timmi – I agree. I drive 45 miles one way to work and the gas is killing me. Im a pilot, and the net a cows are rising too which is now going to hurt my job when less and less people fly.
It’s official: AAA is reporting that the spike in Ohio yesterday is the biggest in the nation.
Love how stations in the South only went up 5 cents…..
That’s what is so brilliant with the spike price policy – it helps us focus on the short term ‘gain’ of avoiding a couple dimes a gallon, conveniently ignoring the big picture which is that we’re paying so much as it is. It’s the trinket in our cereal box, if you will.
For the typical Speedway-striken customers that fill, say, 20 gallons a week at 3.75 that’s $3900 a year. If we manage to make all our purchases at the spike low, and the low being 29 cents a gallon, and there are 30 spikes a year, that saves 20 gallons times 29 cents times 30, or $5.8 per fillup, or $174 a year. $174 a year won’t make Speedway rich or us poor, not on an expense of $3900, but the whole point is the reason. Sure, they alienate people some, but do it for a long period of time and people simply shrug it off as another of life’s inconveniences. It’s anything but.
This’ll get everyone fired up:
The average price (per AAA) where Isaac ACTUALLY hit is significantly lower than up here:
Louisiana $3.71
Mississippi $3.61
Illinois $4.13
Ohio $3.92
Indiana $3.98
Michigan $4.08.
Chris, part of that is we have had continuing refinery issues, and as a result a refiner was buying on the market in Chicago just this week. Louisiana also pays about 20¢ less in taxes than Indiana, Michigan and Illinois, 8¢ less than Ohio.
http://www.api.org/Oil-and-Natural-Gas-Overview/Industry-Economics/~/media/21EBD0B62EBA42B1965EE82EFFB6585D.ashx
>>>$174 a year won’t make Speedway rich or us poor, not on an expense of $3900
Turbo, multiply that by the number of customers Speedway gets, and it would make them rich. But the one reason it won’t is because they follow market prices.
Bill, they are already making a lot of money as it is, and the strategy has its downside as it seems that it would be replicated elsewhere if it was a game changer. They could just pop the price by a bit and collect the same revenue, it’s not like people would care.
They either have a lot of confidence in their strategy or the rewards outweigh the risk of attracting the curiosity of the powers that be and the risk of alienating their customers. I don’t see a few cents a gallon worth the effort especially if they can do it easier by simply keeping prices more constant but higher.
My guess is that it’s either something that allows them better control of price over competitors (as if they needed it), something that helps focus customers attention away from the price itself and more on the “thrill” of buying “lower” (think kohl’s) or to encourage more frequent stops to fill up and go inside…
I’m not sure I’ve ever seen as good a case for gouging. Monday’s wholesale spike of 32c/gal led to Tuesday’s hike. Tuesday’s wholesale dropped 18c/gal, but stations are still charging the higher price and likely didn’t even buy at the temporary higher price. Insane.
Question is, why won’t the government, AG, or anyone else step in and do something about this?
Gas hike for Labor Day Weekend on Thursday?
oops Friday sorry. I forgot what day it was haha.
I think we’re seeing a case where the refiners and the retailers shouldn’t be the same company. With the Chicago spot back up to 3.31, just in time for Labor Day, something doesn’t pass the smell test.
It’s more complicated than this. There is a very entertaining web site run by the state of California that lists average weekly prices for branded and unbranded fuel, including a breakdown of price to cost of oil, cost of refining, and distribution/marketing. During the 2008 “crisis” it was laughable to see how refining costs were wildly swinging first in an effort to extract maximum profit from consumers when gas and oil prices were “reasonable” all the way to refining for free when oil was in the 130’s and above. Refining is a fixed process and costs should not vary by this much week to week (excluding switchovers)… Similar with distribution and marketing costs.
If a state as enlightened as California (:-)) can’t do anything about such actions, it is unlikely that states like Indiana would even notice, let alone do anything.
Here’s the link for above:
http://energyalmanac.ca.gov/gasoline/margins/index.php
Note the entertaining relationship between crude cost, refining cost, and retail price. For extra credit, look back and see what was happening in interesting oil / gas pricing times…
How did the quote go… “nobody ever went broke overestimating the intelligence of…”
David, if the ‘government’ or the AG stepped in on this you could hear the screaming from Tampa all the way up here! Why its the capitalistic American way! Government interference is EVIL (unless they interfear to help any given interest group, probably not us either anyway)
This is the way of capitalism, charge what the traffic will bear then add 10 cents on top just for good measure.
Only thing one can do is be a shareholder in a major oil company or two and reap the rewards.
C’est la vie.
“When gas prices act like Apple Computer, we get price hikes, like the one we’ll get tomorrow”
The only DIFFERENCE is that is there are OTHER, and BETTER choices out there than “APPLE” With Gas Prices there are Not another choice.
People who buy apple products are Brain washed by apple thinking that apple is the best.
Truth be told. There are so many other, and better choices out there that can actually do more than “Apples” Extremely High Over Price Products…
I Once too wanted an Apple this, and Apple that, until I found out there were other products that can do what “apples products” can do an more, for a whole lot LESS…
There is a Difference here…
Not a good Comparison…
For the graduate level course in oil economics, calculate the impact of gas going from 2.00 to 4.00 in a few years versus how much oil stock you need to own to break even. Then, add to your model the chance your own product or service will see a serious decline in sales because disposable income is down, add the chance of losing a job or drop in income, and see how much investment in oil is needed to counter all that.
It’s the opposite of the “you don’t have to outrun the bear, you only have to outrun your fellow hikers”. You can outrun them all but at the end it’s a no win situation.
Well yeah Turbo, I agree. We peasents cannot blunt “the Force” if you will but we can at least pad the shoulder before we get hit. Most of us are not going to own enough Exxon or Chevron or whatever to get rich or even get a ‘free’ tank o gas every now and again. But maybe one gets to feel a lil better about it?
Naa probably not.
Nevermind.
Here’s to gas at 3.40 a gallon by christmas.
Oh and an aside here…we have The Exxon/Mobile card along with Speedpass. That gives us a .15cent rebate on our purchases. Well thats getting cancelled on Holloween and then we get a NEW card and Speedpass and if you buy between 45 and 100 gallons you get a whopping .06 rebate. Well, even driving 50 miles a day to and from work it will be close to get the discount for me. The wife is in sales and does 100 gallons in two weeks, EASY. So gee, thanks Mobil/Exxon for rewarding our loyalty with this shit. Now it will be cheaper to go elsewhere and I most likley will even though I like the convenience of the speedpass.
Does anyone really like speedy rewards at Speedway? Or any other ‘deals’ out there?
In Indy and up into Fort Wayne, are a chain of Ricker’s BP. These stations are exceptionally clean, and offer competitive pricing, about 1 cent above Speedway. If you join their rewards club, you get a Ricker’s card that works like credit, but will ACH Debit from your checking. It gives you 10 cents off. I have gotten as much as 13 cents off. There are no points to accrue, turn in. Nothing but using the card. With Kroger, and the other rewards, there are special requirements to meet, this one is simply use the card. I have never been disappointed in the quality of gasoline, or the insides of the station, though I almost never go in. Long term, this seems to fit the no hassle, no planning, simply use the card.