Weak summer, strong fall?

Comment on the September 29 prediction:  Up to $2.59, as CORRECTly predicted.

Tuesday, October 6, 2015, 7:15PM:  Are the markets shaking off their weak summer?  Oil has been going up since late August, wholesale gas prices have been going up since mid-September, and stocks have looked better the past week.  Consequently, we are back in price hike territory, and I’ll be filling up on Wednesday morning, expecting a new price in the neighborhood of $2.65 here in Michigan.  As the Halloween ghost would say:  Boooooo! — Ed A.

Updated: October 6, 2015 — 7:14 pm

80 Comments

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  1. That’s part of the strategy – I don’t recall massive refinery issues when has was sky high even when they were losing money in the refining when crude was over $120-130…

    I think we will see crude rise to $60-65 and gas back to $3.00…

  2. $2.39 appearing in Michigan. Tuesday and Wednesday’s combined 16 cent hike in spot likely at root here (refiner buying)

  3. Again, I ask, “what is on fire”?
    Maintenance is over…..

  4. Maintenance is not over.

  5. Then some more production was taken offline? More than anticipated?
    So, then, what refinery went down/had an issue to cause the 16 cent jump the last few days.
    Every time we hear talk of gas getting to $2 or below, BAM!, something happens to make spot prices go up.
    And you wonder why we’re so cynical…….

  6. I am very skeptical that the Fort Wayne average will dip below $2.00 seeing spot and reading that article on Bloomberg.

  7. EIA report shows Midwest inventories went UP (200k).

  8. “Refiner buying” sounds a but too business like a term for what it really means, no?

    I mean, not too different from companies buying their own stock to keep the price of the stock high.

  9. That or they are foreseeing an unexpected outage.

  10. Niles MI Speedway spikes 1st in our area to $2.39.
    $2.08 Niles WMT. No movement in South Bend just yet. In SBN $2.14 on 933. $2.06 Costco, $2.09 sout side

  11. Turbo, when a refinery is stuck buying, it doesn’t mean they’re buying what they own. In this case it means exactly what TimmP suggests (nicely done, TimmP). Refinery maintenance doesn’t always adhere to the schedule that a refinery is expecting. Thus if work is more complex or more repair needed than anticipated (thus more downtime), a refinery must buy from another refiner to meet the gap and cover their contractual obligations. And when someone’s in a pinch and there’s extensive maintenance taking place, do you think a refiner can offer the same price for tens or hundreds of thousands of barrels from a competitor? Market forces at play here.

    And Chris, perhaps at some point instead of constantly being cynical and denying explanation you could hear it out. I get that people get fed up, but instead of being cynical, you could try to understand it. (I get it- talking about squirrels and venting is way easier to do, perhaps more fun too)

  12. Patrick, I understand the explanation and to be fair to our friendly refiners I don’t disagree with the practice. If you’re a baker and your oven is down you have to get bread somewhere.

    However, the frequency and timing of such activities makes the layperson wonder at times. Unlike bakers, these guys can price their product at whatever points they need and the customers will not complain.

    As I drive around I see more and more Taj Mahal Speedway stations being built and more and more independent operators are either swallowed up or shut down. All that on our dime for the most part as this expansion seems to coincide with the higher margins we’ve been seeing lately.

    If we were dealing with a company we could trust I would welcome the new stores but I fear I’m not going to be able to patronize them.

  13. Refinery issue @ Joliet. Told you so.

  14. We ALL realize maintenance is a necessity. They need to figure out a better way of doing it. The current method is not working. Well , not for us at least.

  15. Turbo- it’s not a “practice”. It’s how markets work- fundamentals of economics. The basis for many markets. It’s buyers and sellers. In this case, when a refiner comes in buying, and others still need supply, and a refiner will pay slightly more per gallon for a larger volume, other buyers increase their offers to source supply.

    In regards to stations going broke, yes, mom and pops have been having a hard time, but any increase that you’ve noticed is likely just an error in calculations. It’s not easy finding solid numbers- I remember that from years ago when I had trouble finding numbers. Sometimes there’s a factor you may not see at play.

    Chris- XOM Joliet has been doing maintenance for weeks. The flarings may coincide with routine maintenance (and generally doesn’t lead to much reaction in markets): https://twitter.com/GasBuddyGuy/status/654687946474258433

    What do you propose to do it better? Should we have some refinery oversight on this matter like I’ve advocated?

  16. I don’t know what the current “method” is, maybe they already do this, but what about setting the schedule so that the same amount(within a narrow range perhaps) of production is offline at any given time? An amount that likely won’t adversely affect supply.

  17. Looks like I’ll be topping off, up the street from my house, in Fairfield tonight. $1.939 @ Kroger and UDF.

  18. I filled up today in South Haven Michigan at $1.92 and it wasn’t much later it spiked to $2.39. One helluva jump for a single day

  19. Can someone more knowledgeable than me please explain why when Spot goes up .16 the retail price goes up .26 as we saw in the Ann Arbor area overnight?

  20. Jeff, one could argue retail was under spot at this instance or that. However it is exactly this behavior – and the fact that refiners are running the pricing show – that makes consumers wary of any numbers.

    I mean, we have tons of refineries in the Midwest yet we seem to be a lot more succeptible to serious pricing variations, something that simply isn’t happening to other regions.

    Between this and the pervasive use of zone pricing it is difficult to establish any trust. We can preach supply and demand all we want but once you see how gasoline is priced in other non Speedway states it makes you wonder exactly for what ride we are taken. My older kid is a grad student west of here and the price model difference is striking.

    Reality or not, Speedway has to wake up and smell the coffee at some point otherwise at some point all the Taj Mahal stores we helped pay for will not save them.

  21. Unfortunately, Speedway will never go away. They have too many people hooked on their SpeedyFreezes. Crack in a cup, apparently.

  22. To me it looks as though Speedway and refiners have determined that pricing confusion is the best way to make the profit. Weather at the pump or on the chip rack inside; pricing confusion increases traffic, and increased traffic increases revenue.

  23. I’ve stopped patronizing Speedways for a while now. I used to go only there for the points promos and that 3 cents off gas, but when I learned about GasBuddy and then found thegasgame, I’ve learned so much and was able to see I was spending more money and the rewards back didn’t offset enough of those costs. Now I buy gas anywhere BUT Speedway and often experience better gas mileage and lower prices to boot (thanks GasBuddy)!

  24. The Kroger station I go to went from 2.049 yesterday to 2.349 today! That’s complete nonsense! There’s a Greedway down the street and their price is 2.349, while Other gas stations in my area are ranging from 2.129 through 2.239 for now.

  25. Thanks, Turbo. Prior to the .16 uptick in Spot the Spike Line Price was shown as 1.91. We were paying variously anywhere from 2.09 to 2.13, outside of Sam’s and Costco. Price immediately jumped to 2.39.

  26. Hopefully MI spike was a knee-jerk by Speedway. Nothing yet in sw Ohio. For those near Cincy, gas is $1.879 on US-127(Pleasant Ave) in Fairfield.

  27. So far so good in Indiana also… Still filled up for $1.97 yesterday because the margin isn’t much below that anyway. Guess I’ll top off Monday if I can. Unless some more serious spot drops appear, can’t imagine we aren’t back to cycling.

  28. Niles MI Speedway after spiking 1st to $2.39 on Thursday is now down to $2.27. Niles WMT went from $2.08 to $2.37 and dropped down before Speedway to $2.19. On the other side of the state line South Bend area never spiked and is $2.03-$2.05 at WMT, Coscto, Meijer, Kroger. SBN avg $2.13 and slowly dropping.

  29. What a difference a day makes. Yesterday gas prices jumped up 30 cents at the Kroger station and Greedway. Today both stations dropped prices back by 10 cents. The lowest prices around where I live are 2.159 and the highest are 2.399.

  30. Interesting article

    http://money.cnn.com/2015/10/25/investing/oil-prices-saudi-arabia-cash-opec-middle-east/index.html

    “If oil stays around $50 a barrel, most countries in the region will run out of cash in five years or less, warned a dire report from the International Monetary Fund this week. That includes OPEC leader Saudi Arabia as well as Oman and Bahrain.”

    “Saudi Arabia, the world’s largest oil producer, needs to sell oil at around $106 to balance its budget, according to IMF estimates.”

    Could we see OPEC cutting production to drive prices up again?

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