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.