After the Energy Crash of 2014

Comment on the January 1 prediction:  We got the hike to $2.09, but it didn’t come until Monday the 5th.  That’s close enough for me, so I’m scoring it CORRECT.

Wednesday, January 21, 2015, 8:00PM:  Sorry for the silence the past three weeks.  I’m having a hard time making sense of the numbers after the Energy Crash of 2014, although my stance right now is that prices are going to start rising as they usually do the first four months of the year.  Right now, January 13 looks like the day of the low for energy (oil closed at $45.89 a barrel), and we got just enough of a jump in wholesale gas prices today that, combined with recent retail drops, puts us in the price hike zone.  I am going to plan on a hike to the $2.09-$2.19 range in the next few days, maybe as soon as tomorrow.

I think what has contributed to the Crash was some traders or funds blowing up and having to sell their energy future contracts.  As an example of a currency trading firm that was wiped out earlier this month: glad I didn’t own stock in FXCM. –EA

Updated: January 21, 2015 — 8:12 pm

90 Comments

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  1. WTI Crude dropped nearly 4% today with its lowest close in nearly 6 years. Might we expect the Chicago Spot climb over the last few days to start heading downward? I sure hope so.

    Turbo drives a Honda Fit (and so do I) so he’s cool in my book! Turbo, gather the squirrels and shake your fists in joy lol

  2. It usually take 8 to 10 business days for crude pricing to make it through to the pump.

  3. Last couple hikes, IN and MI had at least been in synch. Speedway needs a huge one day jump in wholesale to get everyone’s price hike back on the same day. It would make the price hike excecutive’s job easier.

  4. For the record, today Family Express led a spike in NW Indiana to a price of 2.19.

  5. TimmP, that only works one way doesn’t it? Its more like a 8 to 10 hours before they go up…

  6. Mike…Yeah, I know what you are saying. Just like the markets were going up, and so did oil. Earlier this week, the markets went down, and oil went up. But actually, if you go to Gasbuddy and look at the last month in Crude, you’ll see that we are still getting rid of the last couple weeks of higher oil than we had prior to Jan 14th. We have only Re-Reached the low we had on the 14th. AND like I said a while back, even if crude were free, costs to refine, store, deliver, Fed Taxes, State Taxes, [IN and MI] sales taxes, fees, and retail margins, it makes anything under $1.50 just about impossible. Then you add 30¢ price spikes and, and I frankly don’t see how we can expect gas to get any cheaper than a state average for Indiana to be about $1.78 or so. EVER AGAIN. Which beats the daylights out of being refreshed when gas goes down to $3.79 after a long hard spike at the $4.00 -ish mark.

  7. Get gas in Indy/Indiana while you can… Speedway pushing out hike to $2.29 so far this morning. NW Indiana went up yesterday afternoon thanks to family express ($2.19)

  8. Yeah, the margins appear to be pretty thin, so it makes sense, despite the inevitable fist-shaking.

  9. South Bend, IN.
    Speedway spike underway to $2.29. $2.19 across the line in Niles, MI. Fill up for $1.79-1.99 while you can. I hit $1.80 yesterday.

  10. 2.29 despite record low crude prices… Is that one fist shaking or two?

    Just filled up the Fit at Meijer for 1.87…

  11. Shaking my fists in happiness as I filled up both vehicles for $1.97. The spike puts prices about $1 dollar above spot. Guess the execs are building up some extra cash for summer vacations.

  12. Speedway’s hike last Saturday in Chicagoland came in at 80 cents over wholesale, today’s came in at 88 cents over. It seems to vary anywhere between 80 and 93 cents, the last few month which suggests thay either 1) the wholesale quotes at
    http://www.axxispetro.com/download/wisconsin-cta.txt
    don’t always reflect Speedways costs accurately or 2) price setting is not very precise. The latter seems unlikely since pennies the pump can add up very quickly across the entire chain.

  13. $2.29 from $1.93 in my market (zip code)that turns out to be 36¢ jump. 95¢ above yesterday’s wholesale for Fort Wayne. This time 59¢ for Fort Wayne was the JUMP trigger.

  14. I’m sure Ohio and Kentucky will get our pancake spike tomorrow.
    Looks like the wife and I are cashing in our Kroger points and filling up tonight.

  15. After an initial drop from the memo price things have become static as far as any price drop plus our smattering of $1.80s prices have all but disappeared.

    We may just get pancaked tomorrow and if we do what is the proper protocol since fist-shaking is frowned upon. Do we wait until we get whacked, do a Kevin Bacon and say “Thank you sir. May I have another?” 😀

  16. Maybe we should put Speedway on double-secret probation.

  17. People can be angry all they want. But I’m going to call it out when it’s based on misunderstandings and directed at undeserving bogeymen.

    I didn’t like paying $4 gas, and it made me angry at times. But that didn’t mean that I had to make up silly names for corporations or succumb to paranoia and paralyzing cynicism.

  18. I wonder if there’s a refinery issue at the BP Whiting facility? I know Spot doesn’t match WTI Crude move for move, but just before Christmas, oil was $12 a barrel higher at $56.52 with Spot at $1.35. Today oil is $44 n some change and Spot is also $1.35.

    Take some gas cans with ya when you tank up at Kroger, ChrisDG74!

  19. Chris…This is the “it happens every winter” runup of prices in the Midwest. Wholesale/spot prices vs NYMEX RBOB bottom out at a big negative differential around Thanksgiving then the differential keeps shrinking and usually goes positive in late winter. Even if oil is not moving much. I’ve seen it attributed to scheduled refinery maintenance, to the coming change in gasoline RVP specs and other things.

  20. Yeah, you’re right Jim. I figured with oil’s slide it would help keep more downward pressure on Chicago Spot, but this is as you said “that time of year”. Maybe it’s just me, but for some reason it seems to happen earlier and earlier each year?

    Normally I would hope gas doesn’t go over $4 per gallon, but this year (knock on wood) let’s hope it stays below $3!

  21. “paranoia and paralyzing cynicism”

    Mega lolz, Ren. I can envision me having gasoline price induced seizures laying on my bed unable to move, wearing my tinfoil hat… That’s not how it works.

    In this country we have been raised to not trust the government, but thanks to people like you, we’re told to trust corporations. Or at least not mistrust them.

    That’s not how it works once someone is 12 years old or older. When they’re 12 and under they trust the stuff on TV, reviews they read on the interwebs, the news, and so on. When they turn older, they reserve the right to be a bit more sinister. After all, they likely have participated in one too many class action lawsuits, maybe had their pensions gutted by an employer, or their life’s work invested in some dot com scheme by some scheming Wall Street lowlife.

    If you like to read, I suggest you read up on another of my favorite web sites, the Consumerist. There are schemes there that make Speedway look like the Boy Scouts by comparison, all selling to gullible, er, trusting, consumers.

    Corporations exist to make money. I can’t blame them for that. But I also exist to keep my money for my family. Nobody can blame me for that. If we turn hostile towards a company or three, or mistrust the whole lot of them, not to worry. I’m sure they mistrust us just as much.

  22. “In this country we have been raised to not trust the government, but thanks to people like you, we’re told to trust corporations. Or at least not mistrust them.”

    Nah, I’m going to stop reading right there. That’s a complete twisting of my words. It’s not what I said, nor is it what I think.

    Back to gas prices…

  23. Not all corporations are evil, and many – most if they want to stay in business and have competition – will do the right thing. Here’s the one regarding Turbo Tax (lolz). A software I’ve been using since 1985.

    https://www.linkedin.com/pulse/business-love-means-having-say-youre-sorry-brad-smith

    Meanwhile, on the gasoline front, without competition consumers have about as much power as gnats in a Kansas tornado.

    There are entire industry sectors that continue to refine business practices to extract maximum cash from consumers. Flat Rate plumbers. Airlines. etc etc.

    Is it a surprise that we consumers turn to sites like this, not to ‘get even’ or ‘shake our fists’ but merely to not get taken to the cleaners.

  24. “Is it a surprise that we consumers turn to sites like this, not to ‘get even’ or ‘shake our fists’ but merely to not get taken to the cleaners.”

    That last would make sense — if you didn’t constantly ignore the math and other variables that justify (most) price increases, and if everything you wrote weren’t dripping in cynicism and lame names and jokes.

    Of course using a site like this isn’t a surprise. That’s why I’m here! I just don’t see any point in constantly assuming the worst of these businesses and corporations every time the average price blips up. Thankfully we have recourse for the relatively rare times something illegal or unethical occurs, and we should all do our part to be on the look out. Then we can nail the jerks who actually deserve it!

    Meanwhile, we can consume wisely, keep an eye out for the best deals, and educate others on how to do the same. No cynicism and paranoia required.

  25. The problem I have is that when gas spikes, here lately, the best place to learn about it is here, about 20 minutes before it happens to me locally, and I can’t leave work to get it. I have to know the day or at lease the evening before, and here lately, that just doesn’t happen anymore.

  26. That’s a fair concern, but it’s pretty unusual to know of price hikes of other commonly consumed products in advance. There’s no “milk hike alert” that I’m aware of. 🙂

    So, having even 20 minutes of notice is better than you have with most products.

    That said, are there no laggards in your area? I’ve never had a problem finding pre-hike prices 12-18 hours after the hike is initiated. Now, I’m in a very developed area, so we have one or more gas stations on almost every major street corner. That might not be the case everywhere.

    Also, the Meijer and Gasbuddy alerts might give a very short notice, but this site usually does a good job of predicting hikes one or two days out.

  27. My Gas Buddy alert goes off on my phone when a spike starts. Speedway always is first out of the gates with their big jump and the others usually take 8-24 hours before increasing giving me ample time to tank up. I follow here too, so it’s pretty hard to catch me asleep at the switch.

  28. Ren, most price increases are “justifiable” only due to the constant cycling of prices.

    Let market forces drive retail prices and we can revisit…

  29. There used to be laggards not too long ago. Nowadays there are far fewer. Zone pricing games also make it harder. Let’s say you work in a low price zone which spikes faster than a high price zone… But falls faster too.

    It’s this kind of aerobics consumers find distasteful.

  30. Ren: Fort Wayne has no stations slow to post the spike prices, except for Sam’s and it is 90% of the time way, way out of my way. I have always been amazed at how tight prices and retailers are in Fort Wayne. Not just with gasoline, but with tools (same brand and model), cars, vacuums, labor for home repairs. Everything. It’s like they are all talking to each other. And it only got worse about 10 years ago when the Amish started getting cell phones. Because they now all charge the same for their products and labor also, same as non Amish.

  31. Nearly a 12 cent rise in CBOB spot today tracking a “short cover” rally in the NYMEX March futures.

  32. Wow Jim that’s a hefty jump. Predicting another spike next Tuesday/Wednesday to $2.50

  33. “Short cover rally” I.e. Speculators…

    Wouldn’t want to exclude those now would we? I’ll give them credit for not using King Abdullah’s passing but still…

    Maybe we will hit a record disconnect of gasoline and crude prices. Oil in the mid 40’s and gas in the mid 2’s.

    Better allow extra maintenance time after Sunday’s snow 🙂

  34. If Speedway follows their current modus operandi(spike price being 90-95 cents above spot), Ohio should see $2.399. Only question is, one spike to get there, or two.

  35. Filled the cars yesterday for 1.059/gallon ($1.959-900 Kroger points). If Speedway DOES jump that high, expect the local news to be all over it(with ZERO mention of Speedway leading the charge, of course).

  36. I am off to get a fillup in a few minutes, and I will be taking my gas cans with me. I want my final sub $2/gal pump to be a memorable one.

  37. “Nowadays there are far fewer [laggards]. Zone pricing games also make it harder.”

    Not where I am. I usually have no problem getting pre-hike gas the evening after each hike, and Chris seems to have the same luck.

    This is why I speak only for the Indy market. It’s what I know, and what happens here doesn’t necessarily happen everywhere else. It’s a good tip to remember going forward.

  38. “(with ZERO mention of Speedway leading the charge, of course).”

    Why does that matter? They usually devote 15-20 seconds to these stories. They can’t discuss every nuance. The responsibility of local news to give people information they can use, not to place blame.

    I just wonder why they don’t track prices of other staples like they do for gas. Probably because it’s so easy to track. Prices are posted on every street corner and reported by hundreds of people on Gasbuddy. Which actually works IN OUR FAVOR, compared to other products. But it causes so much more discord…

  39. Ren, a couple observations… In other commodities one rarely sees the antics of cyclical or synchronized pricing. I don’t see Wheaties cycling in price 🙂

    But zone pricing, but of course. In Indy there are some good low price zones. And lots of stations. In the north Indy / Carmel area, not so much. Not as many laggards either.

    Zone pricing for groceries? Already there…

  40. I’m on the north side. No problems in the places I frequent.

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