Category: Commentary

Harvey, Irma, Joel, Katia, and now Lower

Comment on the August 31 prediction: The hike didn’t kick in until after Labor Day, but it was $2.79! 25% CORRECT?

Wednesday, September 13, 2017, 8:30PM: I’ve been waiting for markets to settle down post-hurricanes for this latest post. As horrific the damage from Harvey and Irma, it could have been worse, and our gasoline infrastructure appears intact. So, wholesale prices have been working their way lower, and at some point soon, retail prices should follow. In the Grand Rapids area, look around for under $2.50, which you will find in Wyoming, and I think we could possibly see $2.29 somewhere by Monday morning. -EA

Another Hike This Week?

Comment on Monday’s prediction: Pretty much CORRECT, as prices rose Tuesday, but I think they pulled their punches with $2.65.

Thursday, August 31, 2017, 4:30PM: The severe flooding in Houston is creating supply shortages in the gasoline market. That, combined with end-of-month contract expiration shenanigans, has led to a big spike in NYMEX prices today, and I am waiting for end-of-day information from Chicago, but at lunchtime, CBOB and RBOB were up several cents. Maybe they’ll surprise me and keep prices at bay through the holiday weekend, but I doubt it, and I predict another hike on Friday or Saturday. $2.79? Higher? -EA

The Harvey Hike

Comment on the August 19 prediction: The price reset to $2.55 came on Monday, not Thursday, so 3/4 CORRECT, 1/4 WRONG.

Monday, August 28, 2017, 7:00PM: On Friday, the question was would Hurricane Harvey cause significant refinery closures in Texas, leading to potential shortages of gasoline in the Mississippi valley and the Midwest. We’ve learned from the past to not jump to conclusions about potential price hikes based on potential weather. Well, the flooding from the hurricane is real, and in the Chicago markets, they started jacking up wholesale prices today, so I’d fill up tonight or first thing tomorrow, before they hike prices. Best guess of the new price is $2.69-$2.75. –Ed A.

History Shows: Boring Will Not Last

Comment on the July 25 prediction: CORRECT, as prices rose that week to $2.55 in Michigan.

Saturday, August 19, 2017, 11:00AM: I’ve been posting less this summer for a few reasons. One is the great work of my TGG colleagues. The other is that, other than a brief dip in June, wholesale gas prices have been pretty steady since the beginning of May, and retail prices have been, well, boring. We’ve had eight price resets in almost four months, with prices buzzing around this summer’s Michigan average of about $2.45. That’s a far cry from the twice-a-week hikes we saw a few years ago, and the $4+ per gallon. This inflation-adjusted chart of gas prices going back to the 1970’s really tells the story:

Things will get crazy again at some point, and these quiet times are the ones to sharpen our analytic tools and study the past. Short-term, I think we’ll see a price reset this coming week, probably on Thursday. Back to $2.55 again? –Ed A.

Starting to Feel Like A Summer Oil Rally

Comment on the June 27 prediction: Kind of WRONG, since the hike didn’t happen until after the holiday.

Tuesday, July 25, 2017, 8:00PM: Oil has quietly rallied 10% in the past month, including a health jump today. This is consistent with the seasonality seen in this chart. Nothing dramatic is going on (yet), but the Gas Game brain trust agree that we’ve got a hike coming, tomorrow or Thursday. New price will be at least $2.49 in Michigan, but could be higher. -EA

It has been a peculiar summer so far, so let’s fill up on Wednesday

Comment on the June 11 prediction:  CORRECT as prices slipped lower for the next 11 days, but WRONG on missing the hike last Thursday.

Tuesday, June 27, 2017, 3:00PM:  But it wasn’t much of a hike, and in some places, they’ve given it all back since Friday.  You can buy gas for $2.17 in Wyoming right now, but still at $2.39 in many other places, such as Dorr.  You know, we’ve had some odd behavior for two months now with odd hikes and a 20% drop in oil prices not corresponding to a 20% drop in wholesale or retail gas prices, even with a time lag.  So, let’s predict some more odd behavior.  In Wyoming, we are in price-hike territory already, but not in Dorr.  And with a long holiday weekend coming up, I can envision Big Red getting all the prices back in line in the next two days.  Back to $2.39, or will they go a little higher? -EA

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