Month: April 2014

Situation Normal, All Fouled Up

Monday, April 21, 2014, 7:45PM:  The good news is that the ethanol hikes seem to be over, and that last Monday’s hike was as bogus as it felt, with prices dropping 30 or more cents in the past seven days.  The bad news is that, given that I have more confidence again in my calculations, dropping prices combined with rising wholesale prices means that we have a price hike coming Tuesday or Wednesday.  We could head back to $3.89 again. — Ed A.

Let’s Play Pretend?

Tuesday, April 15, 2014, 9:00PM:  Despite the fact that ethanol prices are back under control, Monday’s price hike had the same flavor as other recent hikes.  That means that the price to retailers still has an ethanol premium included, or those red colored stations are pricing gas pretending that ethanol is still a problem and hoping we just live with it.  A clue that it may be the latter was the curious behavior in prices along Lake Michigan Drive the past two days.  While prices in Grand Rapids were popping to $3.89 everywhere, the Family Fare at Collindale held in the low $3.60’s, and Speedway was forced to follow.  Tuesday morning, they still had those prices, as did the Marathon down the road in Standale.  GoLo there was at $3.79, though, and at 3PM today as I drove by, Speedway and Marathon decided to try $3.85.  They’ll be back to at $3.79 or lower tomorrow, and we see this sort of behavior when there is a lot of room for prices to move, as I think there is right now.  I am calculating a price to retailers of about $3.54 right now.  The easy prediction recently has been “expect another hike”, although my math models don’t quite say that.  In these times, we sit back and watch. — Ed A.

Because Ethanol!

Comment on the March 26 prediction:  So much for the WRONG “easy prediction”, as we saw another Saturday hike, to $3.85.

Friday, April 4, 2014, 8:15AM:  We have a great group of commenters on our site right now, and they have pointed the way to understanding what has been going on with these price hikes lately.  As you may have heard on the news, March saw a shortage of ethanol (related to problems in rail service!), and a spike in ethanol prices.  Since most retail gas these days is at least 10% ethanol, depending on where you live, this has impacted prices, and it is also messed up my calculations.  I have never factored fluctuations in the price of ethanol into my spreadsheet, but I will start doing so when I do my annual spreadsheet upgrade in May.

So, what happens this weekend?  Ignoring the ethanol issue, prices could fall to $3.50 in Michigan, and we are in the mid $3.60’s right now.  If we had the kind of ethanol shortages we had in March, then a hike back to $3.85 is likely in the next few days.

I just don’t know, so the safe thing to do is to fill up for $3.65 or less today. — Ed A.

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