Rather have Whitmer raise prices than Speedway

Tuesday, March 12, 2019, Noon: Big Red’s aggressive defense of margins continues, as we saw a hike to $2.69 yesterday. Over the weekend, there was more chatter about Chicago wholesale prices, but I didn’t they would act this fast on Monday. If something (unlikely) happens with another refinery this week, we could be facing another hike, but I’m not expecting it.

Instead, I’d like to discuss Gov. Whitmer’s gas tax hike proposal. Here’s the issue — due to our freeze/thaw climate, our roads take a bigger beating than roads in, say, Texas. For other Big Ten states like Wisconsin, is it the same? Or is it worse in Michigan due to being surrounded by several Great Lakes? If it is worse, then we would have to spend more per mile than other states to maintain our roads.

Four year ago, I wrote a long posting on my blog comparing spending on Michigan roads with other Big Ten states. We were in the middle of the pack, and we weren’t getting our fair share of Federal dollars for roads, either. Maryland is at the top of the list, and I was there recently. They have good roads. I suspect things haven’t changed, and if that is the case, then we do need to raise the gas tax or find some other ways to properly maintain our roads. So, what is the best gas tax per gallon to do that? -EA

Strike Fast! Strike Hard!

Comment on the January 31 prediction: They held out to Monday, and then prices rose to $2.39. CORRECT!

Sunday, February 24, 2019, 1PM: I’ve been reading a scifi novel this month called Hellhole, which features an evil empire whose fight song is “Strike Fast! Strike Hard!” Feels like this has been the motto of gasoline retailers this month, raising prices twice in surprising fashion, given the margin calculations. I’m starting to think that Big Red is trying to stretch profit margins, which it attempts once or twice a year to do, usually without any permanent damage. For the last two hikes, prices were about a nickle ahead of the 0-cent margin price I calculate, rather than right at it where hikes usually occur. They are about a dime away today, so by Tuesday we should be back in price-hike territory, and I will fill up. Also, don’t forget that Jan-April is usually a festival of hikes, after prices bottom out in December. We are right on form this year. -EA

Too Cold To Hike Prices? No.

Comment on Monday’s prediction: Kind of hard to raise prices in the Midwest, when no one is driving and buying gas. But tomorrow is Friday …

Thursday, January 31, 2019, 7PM: I’ve been watching oil prices rally all week, and then Midwestern wholesale gas prices, now Valero stock has gotten into the act, up a lot this week. Meanwhile, prices have dipped below $2 in a number of places, well below the 0-cent margin price. I recommend filling up Friday morning, predicting a price hike on Friday or Saturday (or best case Monday), in the neighborhood of $2.39. -EA

Blizzard Will Keep Prices Stable

Comment on the December 29 posting and most of January: We had hikes in Michigan on January 2, 9, and 22, each one a bit higher than before. So, the posting was basically CORRECT.

Monday, January 28, 2019, 11AM: A very snowy Monday in West Michigan, and I have a chance to get caught up on my Gas Game analysis after a brief hiatus. Since the first of the year, energy prices have rallied, following the stock market, and I expect these two will continue in tandem. This morning, for instance, both stocks and oil are down. My estimate of the 0-cent margin price this morning is $2.05, and in most places we are well above that, which suggests retail prices will continue to fall slowly. However, we have a gas war on W River Drive in Comstock Park. $1.86?! I’m going to consider that a weird outlier and stick with a prediction of no hike this week, except maybe in Comstock Park. -EA

A Remarkable Fourth Quarter For Energy

Comment on the December 17 posting: CORRECT that prices kept sliding, down in the $1.80’s in certain parts of west Michigan.

Saturday, December 29, 2018, 4:00PM: Let’s be clear about what has happened this fall. On October 1, oil was $75 a barrel and today it is $45. This has led to retail gas prices moving from over $3 a gallon to under $2. This is remarkable! Looking at the new year, because retail prices are all over the place, and we’ve seen a slight rebound in wholesale prices, I suspect Speedway and friends will do a system-wide reset, but we’re only talking something like $2.19 or $2.29. Then, if seasonal trends hold, prices should start moving higher during the first half of 2019 … but I wouldn’t count on it. Happy New Year, everyone! -EA

Recession Coming, or Just Boredom

Comment on the November 25 posting: The reset came on December 4, to $2.39, as we didn’t have any upside in energy until then.

Monday, December 17, Noon: There has been a lack of drama in the energy markets this month, and hence a lack of posting to this site. Today, oil is back to $50 a barrel, which has served as support lately. Short term, it is hard to make a case for a price reset, and we’ll probably see $1.999 again somewhere in western Michigan this week. Longer term, December has been the time of year where prices bottom out, due to more supply and less demand, so, we should probably see higher prices in January. On the other hand, 20+% collapse of oil prices this fall, and the weak stock market, are signs that a recession is starting, which would continue to keep gas prices down. But, you know what they say: “The old joke is that the stock market has predicted 9 out of the last 5 recessions.” -EA

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