Why I filled up tonight, and why I’ve been WRONG lately

Comment on the August 13 prediction:  Nope.  No hike, so the prediction was WRONG.

Tuesday, August 19, 2014, 9:00PM:  OK, I have been Mr. WRONG the past two months.  What’s going on?  Let me at least walk you through the last two predictions.  On August 5, the “Chicago CBOB spot price” that I find on the Internet was $2.61, which translated to a price to retailers of $3.29.  Since the retail price in Standale was $3.43, I thought we were safe.  But then next day, the spot price rose 10 cents, and then another 9 cents the next day.  Ta da, price hike on August 7.  On August 13, CBOB was $2.77, which means a price to retailers of $3.45, which was the retail price in Standale.  Sounds like the recipe for a price hike.  But, the next day, CBOB dropped 9 cents, and then another 12 cents over the next few days.  Ta da, no hike.  And that brings us to today.  CBOB jumped 6 cents today, and the price to retailers equals the retail price in Standale.  If filled up tonight, and I’ll risk further public ridicule and predict a price hike for Wednesday.  $3.55? –Ed A.

Updated: August 19, 2014 — 8:47 pm

65 Comments

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  1. @Turbo Yes, the market does work differently in NC vs. the Midwest. It has to do with Speedway AND the behavior of Speedway’s competitors. Will be interesting to see what happens in New Jersey has Speedway takes over Hess.

  2. Thanks Ed, that is exactly the kind of answer I believe as well.

    It took nearly a decade for my (engineer) coworkers to be convinced of the existence of “dime Thursdays” back in the days of $1.00 gasoline. Most of them, conservative by nature, took even longer to understand that it was not the invisible hand of the market doing its thing but rather a concerned effort.

    In the days of $1-2 gasoline such $.10-$.20 cycles were a nuisance at best from a dollar amount perspective. But in the days of nearly $4 gasoline and $.40-$.50 cycles the dollar amounts add up, and even worse, the public becomes detached from the real issue, vis a vis the price of gasoline.

    My company recently hired a few new employees from all over the country. Without fail it took them a couple of weeks to start wondering “hey what’s the deal with gas prices this never happened in Colorado or Florida or what not”. We dutifully point them to this site for details…

    This isn’t the paranoid musings of a kool-aid drinker, but rather, someone who is frustrated that people’s apathy is as much to blame for this as much as a single company’s “market leadership”.

  3. “Without fail it took them a couple of weeks to start wondering “hey what’s the deal with gas prices this never happened in Colorado or Florida or what not”.”

    Kind of the opposite effect for me as I thought the 30-40 cent spikes in Indiana were the norm for all the states until I did extensive traveling across the south a few years back. I took notes during 7 months of working in Alabama & Georgia and never saw an increase of more than 4 cents in one day. Shortly thereafter I discovered this site and low and behold it was the blasted “Greedway Effect” playing out in full force.

    Meanwhile it’s Friday and that means the usual big run up in WTI Crude which is up $1.22 a barrel at the moment. Next week’s Indiana spike to $3.69-$3.75??

  4. Chicago spot up another 8.2 cents today, FWIW.

  5. A hike three weeks in a row should qualify for a Gold Squirrel award. It’s usually awarded for the (not so) rare occasions that a planned spike occurs at the same time as a sizable drop in the price of crude 🙂

  6. Turbo46032 if you can tell me how to stop being at the mercy of insane gas prices I’ll gladly do so. In Michigan we pay above average prices, but what can we do? Other than watching prices and buying when the price is low I don’t see any other options. I try to keep my driving to a minimum so seriously, what other options are there? It’s frustrating to say the least.

  7. We don’t have other options. It’s that simple.

    And needless to say the powers that be know it.

    What I believe will happen is that in a certain time frame people will wake up from the fog of suburbia and return to higher density cities. Suburbs will become the domicile of the Hoi Polloi while the elites live in cities. This won’t happen in my lifetime but it will start. Maybe in 50 years we will revisit.

  8. Ohio spiking to $3.599 this morning.

  9. Same here in Toledo.

    So much for cheap gas this weekend–I thought we’d squeak by.

    Make ’em grab their ankles if they decided to leave a day late, huh! ::Rolling eyes!::

  10. This Very Revealing Map Shows The Reason Gas Is More Expensive And Who’s Profiting by Joshua Riddle on August 30, 2014 in Economy, Front Page, Politics

    Why is gas so expensive? Well, you can get a range of answers from your local liberals, but the real reason is because of taxes.

    A huge percentage of the cost of gasoline is spent on paying Uncle Sam for federal and state taxes. The government actually makes way more in “profit” on gasoline, than the freaking oil companies do. How twisted is that?

    The federal excise tax is 18.4 cents per gallon, each state sets their own tax rate, so depending on where you live it will vary greatly.

    http://youngcons.com/this-very-revealing-map-shows-the-reason-gas-is-more-expensive-and-whos-profiting/

  11. #define CYNICISM

    Without Federal or State gasoline taxes, perhaps we could get Big Oil to build and maintain our roads, bridges, and highways, and charge us accordingly…

    #undefine CYNICISM

    I spent a number of years in Western Europe and while gasoline was more expensive there, probably double what is here, the benefits that the average citizen received from such high taxes dwarfed the costs involved. I’m not telling you that Western Europe is paradise, far from it, not any more than Indiana is, but it boils down to paying a little in taxes and getting third world infrastructure (Michigan rings a bell) or paying more in taxes and have world class infrastructure like Germany.

    Of course, politics here and there are quite different so here we could be paying $6.50/gallon like in Germany and we’d likely to still have third world infrastructure, like we do. But that’s largely due to how we elect politicians and what we’re willing to tolerate.

    I have lived in Central Indiana for 30 years and the US31 upgrade thru Hamilton County is three decades late and still not designed to do its job. Because of politics, Kokomo and South Bend got their fix first, never mind that Hamilton County pays a TON more federal and state taxes than anyone else in the state. You do the math.

    Taxes are not the issue. What the government does with the taxes is the issue, and we’re getting shortchanged.

    BTW, two squirrels almost took out my wife yesterday on the Monon trail while biking… No more jokes for a while. This is getting persona 🙂

  12. I agree the problem is not with the taxes, but rather how the taxes are used. Michigan has high fuel taxes, but low spending on roads.

    It’s a nasty combination, but Michigan motorists can rightfully complain they pay some of the highest fuel taxes to drive on some of the lousiest roads.

    According to national data, Michigan has the sixth-highest state taxes on gasoline but one of the lowest rates of investment on roads in the nation. Of the 41.4 cents in state taxes Michigan motorists pay on a gallon of fuel, only 19 cents is a fuel tax dedicated to transportation. The other 22.4 cents is all sales tax, and under Michigan’s constitution, most of it goes to schools and local governments and very little of it can be spent on roads.

    Remove that 22.4 cents from the equation and Michigan’s 19 cent fuel tax ties with Arizona for ninth-lowest among the states.

    According to 2014 statistics from the American Petroleum Institute, Michigan’s state taxes on gasoline are exceeded only by California, New York, Connecticut, Hawaii and Pennsylvania.

    Based on the 2012 data from the Federal Highway Administration, Michigan ranks 33rd among states for the amount of investment per lane mile of road; 47th for investment per vehicle mile driven, and dead last among the 50 states for investment per driver.

    How can Michigan ever have good roads when the taxes collected to maintain them don’t get used for that purpose?

    Those crazy squirrels must not be taking your jokes lightly. I’m glad your wife managed to escape unharmed. 😉

  13. It is well known that MI and IN are two of only nine, or is it 11, (iirc) states that add sales tax at the pump or that have sales tax at all at the pump. That does explain a lot as to why we are consistently above average in price. But two things we still would like to know is (1)Why does the MW have such poor delivery that a squirrel knocking out a small electrical substation raise the wholesale price of gas by 18¢ overnight? And (2)What is the real reason that Speedway likes to drag our prices all over creation within the confines of about 10 days? If our Mid West area supply is that tight, would it not appeal to someone to profit a bit by keeping the supply going? Or is it all in the minds of the market and they just go absolutely crazy with pricing in those instances? And as for #2 above, I have speculated multiple times on this site, and have never had it confirmed nor denied.

  14. It always comes back to why, doesn’t it?

    North Carolina has similar gas taxes with Indiana and no spikes. No Speedway either.

    Keeping the supply running and prices low makes no sense :). It’s more profitable to sell less gas at higher prices than more gas at lower price.

    Whether the refineries have done us any good remains to be seen. I personally think that given the pricing schemes we have seen in the last decade or two and the amount of effort BP put to get approval for the Whiting expansion, that it would be a cold day in Heck before another refinery is approved. Not that I would think anyone would propose a refinery any time soon…

    The experts who consider it newsworthy to tell us that prices have spiked (as if we can’t tell by the price boards :)) and instead tell us why they think it’s happening. And even why it’s not happening outside the six state area.

    Speedway simply uses people’s apathy as a way to earn more. I can’t blame them. I have to wonder whether with sites like this and smartphone apps the era of profiting out of big spikes is already over… Possibly an 80/20 situation where 20% of their customers bring in 80% of the profits.

    Again, this is another kool-aid induced theory but it seems to me Speedway may not realize how counterproductive what they’re doing really is. Or the opposite, that most people really don’t pay attention to the price of gasoline.

  15. Answering the question “why” has kept me employed since the age of seven. It is why a large wireless carrier pays me $$ at a time when they are all cutting their margins to offer lower family pricing. Understanding why answers more than just he simple question asked, and opens doors to other answers in the same industry. Living in Indiana, and paying 7% sales tax, one of the higher ones in the nation, and then paying it on gasoline also, helps keep my property taxes on 2 acres on a lakeside lot at under $1500 a year. I know one of the reasons why the gasoline taxes are high, and the sales taxes are high, and it helps me understand why my brother in Ohio, for the same type of property, pays over $4,000 a year, and my schools are better than his. Knowing the whys is important in understanding. And I am sure that is just exactly the reason Speedway will never tell us the why. It will be interesting to see if Speedway can institute this in my other brother’s home state of New Jersey. He can’t even pump his own gas there, or order sunny side up eggs. The citizenry are too stupid to be trusted, apparently. New Jersey will never allow it for as long as it has been going on here.

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