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.

Updated: July 5, 2014 — 10:05 am

15 Comments

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  1. 3.859 might look ugly for the rest of Ohio, but in Cincy the average is still 3.72. Wouldn’t be much of a jump.

  2. I think you could be high on your price, especially in Ohio, I don’t track tax changes in other states and I know Michigan and Ohio Speedway spikes have comm closer to the Chicago ones (especially in Michigan), but they’ve not yet exceeded them. And we’ve already had 2 rounds of $4.09 this year! Wholesale (based on spot prices) should be 15-20 cents less than in CHicago. Right now Speedway would be aiming somewhere in the low 3.80s here.

  3. You might be right, Jim. I guess we’ll see today.

  4. The 2 Speedways by Notre Dame went from $3.65 this morning to $3.59 now. Currently $3.51 at the Niles, MI Speedway.
    Of all stations on the Indiana side $3.44-$3.69 in the South Bend area still, with some of those cheaper ones being a bit lower since yesterday. Don’t notice any being higher.

  5. Looks like Speedway’s having a hard time raising pump prices when wholesale drops 2-3 cents a day. I guess most folks are happy to wait a little longer for the pre-fourth of July hike. Here in the Chicago market Speedway’s average is predicted to be right at what they would hike too if a hike were under considerations. The expected wholesale this evening is down 44 cents since 26 days ago. Probably in the mid 30s drop during that period in most of the non-Chicago markets.

  6. Good point, Jim, and I was WRONG. Wholesale prices did go up a few cents today (Thursday), but will that be enough to trigger a hike on Friday? Hard for me to say.

  7. Dayton, Ohio spiked to 3.799 today.
    Nothing in Cincy, Toledo, Columbus or Cleveland yet.

  8. No idea what Speedway is up to. Those Dayton margins are historic highs if they stick.

  9. Indy’s average price is the lowest it’s been since Feb. 24. We have been at or below the US average for 17 consecutive days now.

  10. My gas game crystal ball seems clouded?

  11. Cincinnati is finally within a penny of the National average. It has been a while since it has been this close.

  12. JEN – ROTFLMAO!!!

  13. Story on the local morning news about how prices are down 10 cents locally since last week.
    We ALL know what that means….
    Topped off at 3.469 on the way in, just to be safe.

  14. ChrisDG74…
    Based on Speedway’s price setting behavior in the last month in the state of Ohio (random hikes in single markets while others have not had one) I don’t know how anyone knows what their strategy now is. If they raise prices anytime soon in Dayton, they MUST have it in for people living in Dayton.

  15. Here in Cincy, we’re still 13 cents above the STATE average, altough I can get gas near me(in areas with a lot of competition) for 3.449 right now.

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