Comment on the November 4 prediction: The hike I predicted for November 8 came two days early, up to $3.55. Then, we got another hike last week, to $3.69. Feels like the best call here is WRONG.
Sunday, November 18, 2012, 7:00PM: Here is how I have been doing my calculations lately. I have been estimating the cost to retailers in this way: start with the Chicago Spot Price from Bloomberg, ($2.645 at the close on Friday), add in an estimated 10-cent profit for the wholesaler, 18.4 cents Federal gas tax, and 3 cents for miscellaneous costs such as transportation and storage ($2.959). Then, add in the Michigan taxes (6% sales tax plus 19 cents per gallon), and we get a base cost to retailers of $3.33 right now. When we get a hike, the new retail price is on average about 15 cents higher, so if there were going to be a hike on Monday, the new price would be around $3.49. Currently, retail prices in the Grand Rapids area are in the $3.42-$3.59 range, so I’m not worried about any price hike coming up, and maybe we’ll make it through Thanksgiving week OK. That hike last Monday to $3.69 was due in part to an mysterious two-day spike of 16 cents in the Chicago Spot Price, a spike that has settled down. Go figure. — Ed Aboufadel