We saw the NYMEX/Chicago market price fall to it’s lowest level since 1/30/13, to $2.8713. This is down from $3.0786 on Friday, and a high of $3.1095 on 2/15/13. Is relief in sight? The market has been very volatile recently, with wide swings of prices from day to day up and down. The last two days we saw drops of 8.73¢ and 12¢, with another drop of 10.67 from the 19th to the 20th. Prices went up more than 5¢ four times in the last month, with a high of 14.87¢ from the 13th to the 14th. So it’s hard to tell whether these low prices will fall more, even out, or go up again.
The average back in 1/30/13 was around $3.55 depending on your state. The average now is around $3.85. Spike Line margins are also very high, from 26-30¢ Expect pump prices to fall tomorrow, and barring some sort of volatile move upward in the market, we should see prices fall through the weekend.
A note about the direction of the Spike Line going forward. I am working on the formatting of the page here to make it more readable. You should see something on that here in the coming weeks. Also, when I roll that out, I will also roll out daily Tweets and posts to the Facebook page. Your feedback on this is greatly appreciated.
Sunday, February 24, 2013: 6:30PM: Wholesale prices rose 6 cents on Friday, while retail prices (in Standale) fell by a dime. I calculate a price to retailers of $3.77 right now, and since that is a typical price in the area, we need to go on price hike alert. New price coming in the next day or two: $3.95-$3.99.
Now, people have been asking me why gas has gone from nearly $3 at the beginning of the year to almost $4, and it is still February. I think the answer is the same one we’ve been talking about for years: the stock market has shot higher in 2013, and when that happens, gas prices follow. Why? Because commodities like oil, gold, etc. have been “securitized” in the past decade, making it easier for speculators to buy and sell them through ETFs with symbols such as GLD (gold) and UGA (gasoline). This leads to demand for these commodities that are not because people want to use these things, but because they basically want to hoard them with the expectation to sell at a later date at a higher price. Congress does not appear interested in fixing these markets, so if you worry about gas prices, then keep an eye on the Dow. –Ed Aboufadel
With a spike up in the wholesale price today of almost 15¢, and since they didn’t spike earlier this week, Indiana should spike tomorrow. I give it a 95% chance for them. The 5% is only there because historically Friday is not a spike day.
Michigan is also over the spike line, although they spiked on Monday, so I have them pegged for a 65% chance of a spike tomorrow, as two spikes in a week usually doesn’t happen.
Ohio is not over the spike line, and this have only a 40% chance of a spike, mostly due to other areas having a chance to spike.
Comment on the February 6 prediction: Exactly as predicted, prices rose to $3.79 on Thursday. That was CORRECT! But where did this new hike to $3.89 come from?
Monday, February 11, 2013, 6:00PM: Wholesale prices rose another 7 cents on Friday, so we got a hike today to $3.89. Does that explain it? Or it there something more devious going on? Perhaps some Big Red person doesn’t like the gas tax hike that Michigan Gov. Snyder proposed last week, and is trying to send One Tough Nerd a message? So far, Michigan seems more greatly affected by today’s hike than our Big Ten neighbors.
Here’s my take on gas taxes: Someone has to pay to build and maintain our roads, and in northern states like Michigan, it costs more because of the effects on winter weather. So, when I hear comments like, “Michigan has high gas taxes already”, those higher taxes may be justified. We also have improving fuel economy, so the owners of hybrids are paying less gas tax, because they are buying less gas, but they are using the roads just as much. But, I don’t want the state to start reading black boxes on cars to determine how many miles I’ve driven. Is the current fuel tax insufficient to pay for road construction? Probably, but I’d like Snyder to be more convincing about this before agreeing to a tax hike. But what would be the fair tax to hike? Yes, I have more questions than answers right now. –Ed Aboufadel
Wednesday, February 6, 2013, 9:30PM: Wholesale prices jumped up 7 cents today, while retail prices have been sliding a bit. Combine that with tomorrow being Thursday, and I predict a hike to $3.79 is coming. — Ed Aboufadel