For once, a prediction of falling prices

Comment on the July 10 prediction:  As predicted, prices rose to $3.85 on July 11.  CORRECT!

Monday, July 22, 2013, 7:30PM:  Looking at NYMEX and elsewhere, wholesale prices appear to be in a new downturn, so retail prices should follow in Michigan.  They already are falling in Fort Wayne, with prices like $3.59.  So, for once my prediction is no price hike this week, and steadily falling prices.  — Ed Aboufadel

Updated: July 22, 2013 — 7:15 pm

8 Comments

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  1. I see margins a little thinner. Not so thin that there will be a spike tomorrow, but also not wide enough to rule out a spike on Thursday. Barring a continuing market drop, I predict a Thursday spike.

    Turbo was talking about the gas prices in Carmel on the previous post. I would like to add this. I’ve worked in Carmel in three different jobs for about 6-7 years now. Until Kroger/Turkey Run moved in, the prices there were amongst the highest in the Indy area. Once Turkey Run opened, prices fell closer to, but a little higher than average. Recently, a Marathon was bought by Speedway. They kept the station open for a couple months before renovating, and in that time, prices were near the lowest in Indy. During renovations, prices remained near average again. After renovations, the new store opened with the first Speedy Cafe in the state. And Carmel is experiencing some of the lowest prices in the state, with Seymour a cent lower. I’ve been getting my gas there at $3.299, which is the lowest in the state, because Speedway gives 10 cents off when using your Speedy Rewards card. Hey, might as well stick it to them, right?

    My thoughts on this are simple. It’s all about competition. Speedway brings in the wallets, especially with the new Cafe, which includes more choice, and more food made fresh in front of you. Other stations are seeing this, and the only way to compete is to lower prices. Speedway of course follows. I don’t know how long low prices will last, but I foresee a couple stations going out of business if it doesn’t go up soon. The Valero across the street from the Speedway may be the first to go, as it’s not got a lot going for it, outside of a Batteries Plus.

  2. Competition does do that to prices, gasoline included. Just a couple blocks from my office here in Fort Wayne, was a lone Speedway. Normal Pricing, not the cheapest, not high either. Then Kroger bought a local grocer and put in pumps just around the corner. Instantly, both stations were among the lowest prices. Then about 6 months after that, a Shell/CircleK moved into an abandoned Clark station on the corner. Three stations all within a block of each other. The prices were then, for two years, give or take, were the lowest in town. Then the competition went away, they are back to pricing like it was when Speedway was all on their own on the corner. Bummer for me. But there for a while, I was buying top tier Shell for the lowest price in the county.

  3. There are plenty of places with multiple gas stations next to each other and competition would be the last word in my vocabulary if I were to describe them. The five or six stations in Carmel that are at 3.39 never competed in the past, at best the Turkey Hill would stay low for a little longer before a spike, but they would always follow the party line.

    Look at the absurdity of gas pricing on N Michigan road in NW Indy, including my favorite “take one for the team” Marathon guy north of the Costco… The only plausible explanation for Carmel is the hope by Speedway that the price war will bring more inside customers to speedway for food, which makes no sense given the abundance of fast food places in the area.

    The BP and Valero will likely go under as the city of Carmel will not issue remodel permits that do not meet the “Carmel Standard”. I know the BP guy has been trying for years. But selling for 8-9 days at way below cost is an absolute business boo boo unless prices are not what we think they are.

  4. Turbo, you are right, about the lack of competition in many cases. It first requires one station to throw down the gauntlet, another to pick it up, and then it’s a matter of who blinks first. Otherwise, they get along to go along. Your last statement about BP is also correct. We either have no idea of the actual contracted pricing, or there is an awful lot of money in the snacks, etc. For one thing, in another thread, I talked about the stations in the South East of Fort Wayne being several cents cheaper, when they are located in high cost areas (risky security, low density pops, etc). Anyway, after typing that, I happened to think, there are also, NO discount stores with cheap chips, etc, no grocery stores, few fast food places. So the sale of secondary articles is definitely supporting those stations, I believe.

  5. Turbo46032 said:

    >>>
    The BP and Valero will likely go under as the city of Carmel will not issue remodel permits that do not meet the “Carmel Standard”.
    <<< Turbo, are you sure you are talking about a BP? There are no BPs in the $3.39 zone that I can tell.

  6. Shell, mea culpa.

  7. does anyone know why BP is giving out $10 gas cards for only $4?

  8. I’m not sure I would accept the theory of competition due to Speedway’s newfangled store in Carmel (i.e. drop prices in the hope of attracting people inside to try the caviar burger or whatever they’re serving). There are quite a few other low price spots popping up in Indiana, all with the magical 3.39 price (Crawfordsville, etc).

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