After the Surge

Comment on the July 22 prediction:  No, they didn’t reset the system until the beginning of August, so WRONG.

Thursday, August 20, 2015, 11:15AM:  So, I take a few weeks off for some academic travel and some relaxing and everything goes crazy.  Why are we so vulnerable to the refinery in Whiting?  Just to show you how crazy it was last week, here are two screenshots from Speedway’s web site on August 11 and 12, from a station in Fort Wayne.  The nice thing: with a Speedy Rewards card, they gave you the pre-hike price for the rest of the day.  Do they do that in Michigan?

Aug 11-12 Hikes Speedy RewardsNow, what’s next?  Since the Uber-like “surge pricing” last week, Chicago CBOB has gone from $2.51 to $1.96, and I bet it is lower today.  Oil prices are in free-fall again, down near $40 a barrel.  And those $2.95’s I see around the Grand Rapids area look rich given the CBOB price.  (I see we are down to $2.82 in Kentwood as I write this.)  So, expect prices to keep falling, probably through the end of August.  I’m not going to be in a hurry to fill up. — Ed A.

Updated: August 20, 2015 — 11:20 am

102 Comments

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  1. Looks like the gas price guarantee is only for certain IN, KY and OH stations.

    http://www.speedway.com/GasPriceGuarantee

    Looks like they also raised your grade spread coincident with the spikes last week. Ours went from 25-30 in Chicagoland.

  2. I hope that list expands. There are none in the Indy area.

  3. I don’t get gas at Speedway so I don’t know about that price guarantee, but ya the grade spread here in South Bend IN went from .15 between grades to .20 now at Speedway. They spiked it .70 in 2 days & increased the grade spread.

  4. Has ethanol had a fire sale the last few days? I ask because while E-10 has only dropped 20 cents at all of the Speedway’s along my commute(coming down only after everyone else), E-85 has dropped 60 cents. There is now an 80 cent spread( $2.79-$1.99), when Monday it was only 40.

  5. Chicago ethanol has been in the mid-upper $1.40s all month (a month ago it was a dime or so higher). I don’t have figures back before that although recall a year or two ago when it go up to around $3.50. At that point…I didn’t understand how they could sell E-85 for less than E-10, but they did even if the difference was donw to 10-20 cents. Anyhow…at least week’s ethanol and CBOB prices, where CBOB was more than a dollar over ethanol, 40 cents was ridiculous. 80 is more reasonable. Deliberately, or inertia, or ???, Speedway was slow to react. The spread in IL has also increased – by 60 cents – to $1.30 with some stations selling E-85 at $1.79. Will see if inertia keeps the $1.30 spread even as gas drops well under $3 a gallon again over the next few weeks.

  6. The increase is grade spread is long overdue in West Michigan. Wholesale premium has been 60-80 cents more than regular for months, and yet most stations had a 40 cent spread. Chicago Spot market spread is about 90 cents between regular and premium, compared to 25-30 cents for other spot markets.

  7. Does it really cost 60-90 cents a gallon for premium over regular, or it’s just a question of sticking it to the unfortunate souls that have to have premium gas?

  8. Turbo46032…
    That is a good question. In California, where gas prices are perennially higher than in the Midwest, my quick spot check of quite a few stations still found only a 10-12 cents gab between grades, It would be interesting to find out an explanation for the big difference. California already has its own unique air pollution requirements.

  9. Spot back down almost 80 cents, yet the price at the pump is only down 11.
    Seems about right. /sarc

    Needless to say, I won’t be filling up any time soon.

  10. Well Chris, I’d hold off as long as you can, or just keep topping off with 1/4 tank if you need it). Just because spot dropped (only recently- as in the past 2 days) doesn’t mean it immediately gets passed along since the more expensive gas is still in the tanks. Just as the we never got the full brunt of raise on the other end either thankfully since it was brief enough of a jump (otherwise for example, here in Indy we were NOT paying $3.24-3.30 and peaked at $2.99). Should be significant drops throughout the weekend. I plan on waiting until at least monday at the earliest (and only put in half a tank wed. because I was down to my last 2 or 3 gallons with the gas light on!)

  11. Jrunner, sure didn’t take them long to raise the price in Kalamazoo 70 cents in 2 days with what I would image was still cheap gas in the tanks..

  12. Mike…YES, that’s what I’ve been saying all along. Retailers convinced the consumer that they raised prices so fast on what the cost would be to refill their tanks. Now that it would be far cheaper to refill their tanks the savings aren’t passed along as fast as the profits.

  13. Funny how the attack is always only on gas though, where in general, the station owners really don’t make much money on all on the gasoline portion of their business. If coffee drops, if diesel drops (thus reducing food transport costs), if commodity prices drop, you don’t see the prices drop at the store immediately and I rarely see people rage about that. General mills cheerios are still 12 oz or 20 oz rather than the 14 oz and 20 oz they were a few years ago. Better yet, airfare prices in the past year or so haven’t dropped despite fuel prices being down considerably, but I see no attorney generals investigating the airline industry… but they’ll try to score political points for an unexpected refinery outage. You say that cheaper gas was still in the tanks, and yet the stations were jam packed when people realized what was going on with the first hike (probably draining the tanks before the second hike the next day). Until we live in a socialist society where they give away gas or actually build public transit that doesn’t suck (I live in Indy, I can bike across town faster than I can take the bus, and no trains to speak of), the yo-yo market that’s incredibly tight in the midwest will hold us hostage

  14. We’ve dropped 25 cents in Delaware County Indiana since last weeks spike. Speaking of 25 cents, WTI crude is just a quarter away from going under $40 bucks a barrel at the moment. It would be nice to get back to pre-spike levels ($2.19) by next weekend, but something tells me it’s going to take longer than that

  15. Chicago Spot all the way down to $1.50 right now…..

  16. Can I buy crude and get Speedy Rewards points? I’ll refine it myself 🙂

  17. I was very lucky to find a shocking $2.39 near downtown Indy! Just a couple miles from one of the many stations still in the $2.90s.

  18. Some of our stations North of the I275 circle have finally dropped to the low 2.60s. But Cincinnati, as usual is 14 cents over the Ohio average and is now around $1.30 over spot. We’re in the wrong business.

  19. Finally saw a station in the Cincy area drop below $2.60, all the way to $2.599.
    We’re saved!!!
    Still not filling up.
    2 days-worth at a time.

  20. Sooooo… What about the predictions of doom that spiked refined product prices by a dollar a gallon? And what Whiting Magick was done to resolve the issue instantly?

    I mean, we are all friends here… It can’t be that difficult to estimate downtime? Could it be they got away with the doom prediction, hiked too fast, and people actually noticed?

  21. Anybody want to translate that to English?

  22. IIRC, spot is the gasoline for which we follow the pricing in this site. Spot is also, IIRC, gasoline that is not promised to anyone, ie produced beyond and above fulfilling contracts. It would follow then that buyers with delivery and pricing contracts don’t really “worry” when Whiting has an issue. The whole idea of purchasing SPOT is to purchase the “extra” gasoline which holds potential of being less expensive since it isn’t promised. So when Whiting happens as it inevitably does, the non-promised gas disappears before bidding on it is even started. Bidders PANIC trying to find non-promised gasoline they can bid on and end up bidding themselves (and us) broke trying to assure that they get the tiny trickle of unprommised fuel.

    So it’s mostly panic during the first week that takes the pricing so high. After the bidders are done screaming OUCH before they got hurt, things settle down a bit. And the consumer licks the wounds the bidders gave us, LOL.

  23. So today I went to Clifty falls state park in Madison Indiana. Left Delaware County Indiana which had 2.79 gas and made it on fumes to Versailles Indiana which was having a nice gas war and filled up on 2.07 gas. KEEP THE WAR GOING and THANK YOU!

  24. Lemme turn on the Turbo-To-English translator here….

    “Sooooo… What about the predictions of doom that spiked refined product prices by a dollar a gallon?”

    There were all kinds of predictions of gloom and doom about the supply chain. Those are common when an issue occurs. It almost sounds like the industry has never encountered a failure in a refinery, let alone a key one. It’s like the Martians have landed in Gary and took the wrong exit and all of a sudden OMG!!!

    “And what Whiting Magick was done to resolve the issue instantly?”

    Since the crisis has apparently been resolved in a week instead of the many weeks the prognosticators indicated, this suggested either the prognosticators don’t know what they’re talking about, or it’s all a big plot to rack up the price of gasoline just because.

    “I mean, we are all friends here… It can’t be that difficult to estimate downtime?”

    Are there no contingency plans, emergency procedures, alternate supply chains, and the like? I mentioned before we lost a critical supplier when the Fukushima plant its, ehem, reset, and while things went hectic for a while we never raised prices or missed deliveries… If the Chief PipeLiner gives an estimate of 6 weeks and it’s running in 2, then that’s either miracle work or just an estimate pulled out of thin air…

    “Could it be they got away with the doom prediction, hiked too fast, and people actually noticed?”

    This surge was comically unprecedented… And it happened way to fast way too high. If it had gone up commensurate with supplies “dwindling” or “solid estimates it will take till Christmas to fix” then I could see the reaction being reasonable, but before we could tell if it’s a vending machine that failed or the main cracker, boom! Hence some people noticed…

  25. So I went to Clifty falls in Madison Indiana yesterday. I left Delaware Cpunty with 2.79 gas and made it on fumes to Versailles Indiana and filled up on 2.07 gas thanks to a local gas war. Keep the war going, it made my trip much cheaper. I capped back up on the way home.

  26. WTI Crude currently at $38.75 perhaps will translate to spot down under $1.20 within a week? That should give us gas prices at or just below $2 bucks, unless they keep the margins extra high (wouldn’t surprise me a bit if they do)

    We’re still $1.15 or so above spot with gas finally drifting into the $2.60s. I wonder how Whiting’s 6% capacity reduction is doing lol

  27. Looks like a very few stations in Fort Wayne have broken the $2.70 barrier, and even fewer have broken the $2.60 barrier. I haven’t personally seen any of the latter. Just mid $2.60s.

  28. Saw some $2.77s drop to $2.62 today.
    STILL at least 40 cents too high. STILL not filling up.

  29. The best we can do in Southwest Ohio is $2.55 in Fairfield. Around me I see nothing lower than $2.71. BUT, if I travel about 10-12 miles from my home to Aurora, Indiana I can find prices as low as $2.32.

    $2.71? $2.32? This is a no brainer.

  30. I’m driving my riding mower to work while waiting for prices to drop…

  31. Timmp…
    Spot on comments on 8/23.

  32. Spot down 43% since 8/12. Pump price in sw Ohio down less than 8%.
    You just can’t make this stuff up.

  33. Chris:
    My mamadone told me back in the ’60s that anything on TV or the movies is nothing as crazy as real life. And here is living one such example.

    I understand the need to trail. But the UP leads, and the down Trails? I worked retail, and pricing of the product on the shelves did the same thing. Not sure why they need to make it on both ends but they all do. AND it is much much easier to make the big $$ on the down swing and that’s where we are right now. In the mean time, I am buying only enought to get me to work on the days I can’t work from home. And the 5Gallon cans in the barn for mowing and the generator will just build up till the price gets down to a more normal margin.

  34. Oh, believe me, I know how it works. That’s why I’m only getting 2 days-worth at a time(3 gallons).

    Oh, and by the way, Whiting is fixed. So, what were originally told could take months, actually only took 2.5 weeks…………

  35. I just heard on WOWO that Whiting is back on line. Successfully. GasBuddy expecting a controlled free fall of prices over the next couple weeks…..Of about 20 cents a gallon!

    LOL, has he just jinxed it?

  36. Actually 20 to 50 cents Patricks prediction to WOWO.

  37. I guess I”ll just continue putting a couple gallons in here and there. Trickle…trickle…

  38. According to GMA this morning (on the scrolling ticker), they are expecting the National Average to fall to below $2.00 a gallon by late fall.

  39. The $2.00 is Speedway Dollars – more likely to be $3 than $2 in my opinion.

    I wonder if they actually fixed Whiting quickly to ride the downward trend in price…

  40. Turbo: the downward trend is where you make the easy money. Just TRAIL rather than lead.

  41. Indiana, Michigan and Ohio are all 20-30 cents below their peak already, and dropped 4-4.5 cents from Monday to today. It may take some time, but it’s almost double the usual drop from day to day right now.

  42. oh no, our first potential hurricane heading towards the ultra warm waters off the coast of Florida…Predicting a Cat 1 hurricane in 5 days. If it doesn’t turn north and continues through Florida and heads into the Gulf……can you say hold the intended price drop.

  43. I thought the contention of The Gas Game was that Speedway spiked and also led the dribbling down. They don’t seem to be leading now.

  44. Around here, Speedway NEVER leads the dribbling down. UDF is always the first to dribble down, and they drag Speedway with them.

  45. Is it me, or do prices seem stuck? A drive to work this morning shows EVERY SINGLE station at the exact price it was at Tuesday Morning? I was expecting 3, or maybe 2 cents since Whiting is back online. But NOTHING!

  46. While we’re waiting for the big drop in spot prices to kick in at the pump, I’m taking joy in the fact that the Ohio Spike Line has (just) dipped below $2 a gallon. 😀

  47. Looks like it will take another week to wipe out the recent 80 cent a gallon jump. I thought it would drop a little faster, but we all know how that works.

    There are some stations in the $1.90’s in SE Indiana not too far from Cincy. Maybe ChrisDG74 will be heading there for fuel lol

  48. Sorry for being late updating pages. I did not feel good last night. Needless to say, I see eight cent drops in average across the board. And, with the 12 cent drop in spot price, we may see the same today, too. Ohio is below the US average, Indiana and Michigan will follow soon, possibly today.

  49. I AM about 15 minutes from SE Indiana.
    Cheapest near me is $2.43, quite high, still 24 cents below the Cincy average.

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