Gas Game Class Is In Session

Comment on the April 18 posting: CORRECT, as prices rose to $2.95 the next day, as predicted.

Sunday, May 6, 2018, 9:00PM: As we bump up against $3 gasoline, let’s review how our calculations work. It starts with RBOB = reformulated gasoline blendstock for oxygenate blending, in other words, the unleaded gas that we buy at the station. The wholesale price for RBOB is set via trading on markets in places like New York and Chicago. In my spreadsheet, I start with the end-of-day RBOB quote that I can find online.

Actually, RBOB makes up 90% of what you get at the pump. The other 10% is ethanol, which is cheaper than RBOB, so I have a spreadsheet calculation like 0.9*RBOB + 0.1*Ethanol. Next is to add on Federal gas tax of 18.4 cents per gallon and about 18 cents to take into account transportation, middlemen, etc. Then, we tack on 6% sales tax, and in Michigan, 26.3 cents per gallon of gasoline tax (to *eventually* fix the roads). Friday’s RBOB quote of $2.12 converts to an estimated cost to gas stations of $2.83. So, if the price is near $2.83, it is time to predict a price hike. Hikes tend to tack on 10-25 cents to that cost that I calculate.

This evening, prices in Grand Rapids vary from $2.68 to $2.95, so we are wandering back into price hike territory again. I imagine the debate in gasoline headquarters is to under-hike back to $2.99, or do a standard hike which would take them to $3.09. Whatever they decide, I’m sure we’ll see a reset this week, probably on Tuesday, so I am going to fill up on Monday morning — $2.70’s on Alpine Ave! -EA

Updated: May 6, 2018 — 9:25 pm


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  1. Mike - Kalamazoo

    Hey my Michigan friends, think I would fill up first thing this morning. Big Red just did their 1 cent drop first thing this morning. Usually a sure sign of a big jump around lunch..

  2. Gleaned from Monday’s AAA Michigan report as published locally:
    “This week, motorists in Indiana (+66 cents) have the largest year-over-year gas price difference in the country,” AAA reports.
    “Illinois (+52 cents) and Michigan (+51 cents) join Indiana on the top 10 list of states with the highest year over year increase.
    Tom Kloza, head of energy analysis of Oil Price Information Service, tells A.P. he believes “this will be the most expensive driving season since 2014.”
    “However, higher oil prices have also enticed U.S. producers to ramp up crude oil exports, effectively draining U.S. oil inventories at a higher pace than that oil is being replaced,” Patrick DeHaan, head of petroleum analysis at GasBuddy, said in a recent press release.
    “In addition, recent rhetoric from the Trump Administration inflaming the situation in Syria and pushing a trade war with China is like pouring gasoline on a fire — they certainly put more upward pressure on prices.”

  3. The problem is not 3.00 gas. The problem is that the same process that got us to 3.00 gas will get us to 3.75 or so with crude well under 90.

    At that point the economy will start to go south again and then we can appreciate it all like the last time.

  4. This is from @FamilyExpress: #GasPriceForecast: Fuel prices are highly likely to increase over the next 12-24 hours throughout our service areas. Fill ‘er up! ?? ???? #NWIndiana #Lafayette #Valpo #CrownPoint @NWINews

  5. $2.99 spike starting in the Indy area.

  6. South Bend IN – Speedway spike to $2.99 and had just dropped to $2.75.
    Costco $2.69, SBN AVG 2.84

  7. independent retailer

    Just got a text from Meijer. Local Speedway is at 2.99

  8. Mike - Kalamazoo

    Yep, 2.99 in Kazoo area also

  9. 2.899 NW ohio RT 20 corridor

  10. trump nuked the Iran deal and imposed sanctions on them. I’m thinking this will lock us in the $3.00-$4.00 gas range for the rest of the year.

  11. $3.75 here we go. Now get the popcorn and lawn chairs and watch the economy go poof. In 2007 or so we were accustomed to paying 3.25-3.50 but nowdays it’s more 2.50…

  12. The interactive chart you linked the other day was quite telling, Turbo.

  13. It’s what I’ve been saying for 10 years. Fuel economy goes up, hybrids, electric cars… Doesn’t matter. They’ll adjust the margins as needed.

    This year we haven’t had drama, refinery incidents, or geopolitical issues to worry about. But we’ve added a cool dollar a gallon to our price fairly rapidly.

    Today WIBC had some professor from University of Indianapolis try to convince us the spike is really because we haven’t built new refineries. I’m sure…

  14. Saw a report yesterday that said $75-$80 oil would give us gas approaching $4. And just think, a few years ago it took oil at $140. Just keeps getting better and better right Turbo?

  15. Well, it didn’t take long for the market to react to yesterday’s decision on the Iran pact. WTI rose $1.95/bbl overnight to over $71.00. Additionally, the API report showed a large draw down on inventory of 1.9M bbls last week although it is reported that today’s report should show smaller reductions.

  16. Mike - Kalamazoo

    I know, lets pass a bill that lets us export our gas to other countries, we promise it won’t affect prices here. Trust us, we would never lie to you…

  17. Spot is up a nickel at mid day. Might next weeks spike reach $3.19? Market forces at work lol

  18. Mike, you gotta love these politicians. They are so nearsighted they can’t see the end of their nose.

  19. Gas going up to $3.09 in Indianapolis today.

  20. Going to 3.09 in Kazoo now

  21. South Bend IN – Speedway spike $3.09 up about .30

  22. Spot closed up another 4 cents today to $2.16. Wonder if they’ll give us one spike or two leading up to Memorial Day weekend? Either way I wouldn’t be surprised to see $3.29 gas. All that with oil hovering around $70-71 right Turbo!

  23. Big Red trying desperately to hold on to their 36cent spike from earlier this week, even as the stations around them dropped back to $2.99 over 24 hours ago. And even completely ignoring the fact that the Murphy Oil station near them only went to $2.84….

  24. 2.59 in Kansas…maybe I oughta bring back a few trash cans full of gasoline ????

  25. managed to see a 2.799 still NW Ohio area.. car filled..8 gallon boat portable tank filled..2 more portable tanks filled.. hoarding time.. and still 10 days before the May holiday…

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