Month: July 2014

Silver Gas Tank Playbook for the Week

Comment on the July 14 prediction:  We got a hike, but not until Thursday the 17th, as prices fell hard that week.  I’m not going to complain, but I was quite WRONG in my prediction.

Saturday, July 26, 2014, 9:00PM:  It’s been a mild summer, weather-wise, and gas price-wise.  Is there a connection?  I don’t know, but let’s figure out the playbook for the coming week.  Using a Chicago CBOB price (i.e., a wholesale price without taxes, etc.) on Friday afternoon of $2.64 a gallon, that translates to a price-to-retailers of about $3.32 a gallon.  That calculated price is about what the retail price needs to be to trigger a hike.  Here is the Grand Rapids area, we are down to $3.32 in Sparta, but mostly in the $3.40’s elsewhere.  So, if wholesale prices are stable, I think we’ll see retail prices drift down in the $3.30’s, followed by a hike on Wednesday or Thursday back to around $3.65 (the price at the last hike).  If wholesale price drop, then we might not get a hike, but if those prices rise, we definitely will.  Too early to make a solid prediction, so this is just a commentary. –Ed A.

Wrong last week, but I doubt I’ll be wrong this week — fill ‘er up!

Comment on the July 5 prediction:  No hikes at all last week, so I was completely WRONG.

Monday, July 14, 2014, 8:00PM:  Just so you know I practice what I predict, I topped off my tank twice last week, thinking a price hike was imminent.  But, due to sliding wholesale prices, there was on-going pressure to keep retail prices down.  However, wholesale prices have stabilized, and I’m seeing gas in the $3.20’s in Fort Wayne, and $3.30’s in Lowell, Michigan.  By my calculation, the price to retailers is about $3.40.  So, I’m going to fill up Tuesday morning, expecting a hike with a new price at least $3.69. — Ed A.

What Uber Might Tell Us About Gas Pricing

Comment on the June 22 prediction:  For Michigan, I was CORRECT about the hike, which occurred on Wednesday, June 25, but we only went to $3.95, the hike didn’t occur in some other states, and what was I talking about with the “holiday weekend coming up” a week early?  So, give me a 1/4 WRONG.

Saturday, July 5, 2014, 10:00AM:  There has been a lot of discussion on the web site lately about whether or not the way Speedway and friends price gas in the Midwest is to the advantage of consumers, and whether or not we have a “free market”.  I don’t know the answer to these questions, but I do know that Midwest gas pricing can provoke strong emotions, and something I read recently about Uber suggests why.  For those who don’t know, Uber “makes mobile apps that connect passengers with drivers of vehicles for hire and ridesharing services.”  Part of the way it works is that pricing is very flexible and can change from minute-to-minute or day-to-day, depending on supply and demand.  Arguably, it is a clear example of a “free market”.  But, Tim Harford, “Undercover Economist” of the Financial Times, wrote the following recently in Wired UK:  “Such flex-pricing worked for Uber but we can only take so much.  It turns out that prices that stay put aren’t a relic of hand-painted menu boards.  The real reason that prices stick isn’t technological; it’s psychological.  An ever-shifting landscape of prices makes us feel exploited, if not motion sick.”

So, whether or not we are actually being exploited by Speedway and friends, it sure feels like we are.  And that’s why we try to win The Gas Game.

In terms of winning the game, prices are all over the place right now in the Midwest:  $3.56-$3.79 in the Grand Rapids area, $3.90s north of Ann Arbor, $3.37 in Lima (Ohio), around $4 in Chicagoland, etc.  Wholesale prices have been slipping the past two weeks.  Based on my calculation, the price to retailers in Michigan right now is close to $3.52.  So, I think we are setting up for a system-wide reset by Tuesday, in the neighborhood of $3.85 in Michigan, with similar prices elsewhere.  That’s going to look ugly in some places, such as much of Ohio. –Ed A.

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