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Comment on the January 31 prediction:  We saw price hikes on February 3 and February 10, up to $2.35 and then $2.39 in Michigan. I was CORRECT on the first one, and I should have predicted the second one, so add one to the WRONG score.

Wednesday, February 11, 2015, 9:30AM:  Yesterday’s price hike confirms that we are back our usual game rules.  Since I haven’t done so in a while, let me explain the calculations.  We start with an estimate of the wholesale price set in an electronic market.  Thanks to my Gas Game colleague Bill, we have several places on the Internet to hunt around for daily reports like this one.  The Chicago CBOB price at the end of the day Monday was $1.58.  We also have to take ethanol prices into account, which you can find many places online, and a recent quote is $1.41.  With a 90% gasoline/10% ethanol mix, we do the same with the prices, add 18.4 cents for the federal gas tax and 15 cents for a variety of profits taken by various businesses on the way to the retailer, then add in sales tax (still 6% in Michigan) and the state gas tax (still about 19 cents a gallon).  As of Tuesday morning, that gets us to a 0-margin price of $2.23.  (The biggest fudge factor in there is the 15 cents, which I adjust from time-to-time as retailers report to me on what they are paying to fill their underground tanks.)  If the retail price is near the 0-margin price, then a price hike is close by, usually 15- to 20-cents above that 0-margin price.  As I had gas prices in Standale at $2.19 on Tuesday morning, we got the hike to $2.39.  (I was hoping they would wait an extra day, and I didn’t make time on Monday night or Tuesday morning to post.)  So, that’s how it works. -EA

Updated: February 11, 2015 — 9:52 am

21 Comments

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  1. Speedway has been in definite hike territory here for 2 days without doing so (using a slightly different but equally reliable methodology). Folks in Chicagoland thank the folks to our east for subsidizing Speedway’s apparent attempt to keep prices down and put a squeeze on their indy competitors. Only 90 some Speedways over here so not a big drag on their bottom line temporarily bloated by yesterday’s hike in MI/IN/OH.. Have seen this before, and know it won’t last, but it gives me an extra day to wait to fill.

  2. It was a failed spike in Daleville Indiana luckily. Greedway went up 10 cents while the others held fast. Today they ALL dropped 2 cents…well 12 cents in Speedway’s case to even out the board.

    I like it when that happens!

  3. Wish we could say that for sw Ohio. Average price is $2.373.
    Luckily, there are 3 stations along my commute, that have dropped back a bit, 2 down to $2.279, and the other at $2.199.

  4. Not so lucky here in Fort Wayne. Average is pretty high. Only stations I see today in my area that are not @ $3.37 or higher are Costco and Sams. I just LOVE (Not) the way they stick together here. Nobody is a break out.

  5. All markets are free but some markets are more free than other 🙂

    Maybe Fort Wayne has it’s own EPA mandated gasoline blend? I know there’s a number of cities that require it…

  6. As long as I’ve been keeping track, only the counties in NW Indiana (Lake and Porter: http://www.epa.gov/otaq/fuels/gasolinefuels/rfg/areas.htm) are RFG areas.

    While the last hike got stations above the spike line, another increase today may bring us another early week spike next week.

  7. Bill is correct, Fort Wayne has no special gasoline reqs.
    But, it’s hard to find wide price variations on any retail item here. ANY.

  8. With Spot cracking $1.60 today I’d say we’re locked in for another spike on Tuesday to the $2.49-$2.59 range. Fill up the Fit Turbo and maybe shake a fist or two lol

  9. I thought I overheard on the radio that there is an oil based IRA/401K and that “……Oil has made more millionaires than any other investment” If this is true, it explains a lot of things,, not the reason(s) for spikes, but so mush else.

  10. Since we managed to get our geopolitical ducks in a row in Libya, any thoughts towards another spike this week? to, say, 2.59?

  11. Fully expect a spike today, or tomorrow in Ohio. $2.459 or $2.499.

  12. Of course it will spike this week. Go ahead and shake a fist or two lol

  13. WOW! Time to fuel up. Fort Wayne and Indiana just dropped below the national average. Last year at this time, it rarely happened, and when it did, it would only last 1 to 3 days at the most.

  14. …Small explosion at a refinery in Torence, CA. Time for our spot to go up by about 20 cents? I’m not laughing.

  15. Yeah between that and the squirrels that crashed the train on the on the east coast..

  16. Right now I don’t see a spike happening this week. Margins are pretty loose right now. Gas would have to soar tomorrow to prompt a Friday spike.

  17. Ohio’s AWFULLY close to the magic 70-cent spread right now (72). A spike tomorrow wouldn’t shock me.

  18. Let the spike begin! Meijer just sent out the unusual Saturday spike alert…

  19. Spike to $2.399 in Ohio underway.

  20. 2.39 in Grand Rapids also and looks like speedway is doing 20 cents spreads at some stations now also

  21. The cynics among us will notice that once again a spike came right after crude prices had retreated… Just to lock in the “gains”…

    Crude is $51 and we are already at $2.40… Inpressive.

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