Tag: Attorney General

Seemingly “glued-on” price digits tell the story: Gas STILL over $4 in parts of U.S.

Tonight as I step back and look at local prices, I see how high we are compared to several locales. We even sit higher on a regional level- Ohio is paying just $1.98 in areas!

 
Having set the stage, how would you feel knowing oil prices have slid if gasoline prices stayed at their record high levels of $4.25 or so?

Well, in part of the U.S., some people are still paying over $4. In fact, they’re paying more than we ever paid this summer (unless your timing is terrible).

Ouch! Where is the attorney General in Wyoming? They are stuck paying $4.30/gal at this ExxonMobil. Leave it to XOM to charge this even as gas prices and oil prices have fallen 50% off their highs. This is today’s price which I just verified moments ago as well.

Don’t get stuck traveling to the mountains of Wyoming!

Why aren’t gas prices lower?

Tuesday, October 21, 2008, 9:20 AM:  The following question has been posed to me several times the past month:  On July 15, oil was at $145 a barrel, and gasoline cost $4.25 a gallon at the pump in Grand Rapids.  Last week, oil was $72 a barrel, and gasoline cost $2.96 a gallon.  If the price of oil has been cut in half, why hasn’t the price of gas followed suit?

There are a few reasons for this, that I will try to explain.

1.  NYMEX.  Oil and gasoline futures are traded on the NYMEX, a public market with prices available for all to see.  The price of these future contracts helps set what is called the “spot” price, which is what is actually charged when real oil or gasoline changes hands at the wholesale level.  Sales and other taxes are not included in the NYMEX prices.  Looking at these futures prices, both oil and gasoline has dropped approximately 50%, so at least at the NYMEX level, these prices are correlated.

2.  Taxes.  There are three taxes applied to the wholesale price:  the federal gas tax of 18.4 cents per gallon, the state gas tax of 19 cents per gallon, and the sales tax of 6%.  So, that’s at least 50 cents of the retail price that is taxes, regardless of the wholesale price (except for the sales tax, of course).  In the past three months, those taxes have not been cut in half, so it would be hard for the retail price to drop 50%.

3.  Chicago Summer Premium.  I coined this term a few years ago to describe how, during the summer months, the wholesale price in the Midwest is usually higher than the price based on NYMEX.  The reasons for this have to do with reformulated gasoline, variations in supply and demand, and some other mysteries I’ve never solved.  A way to monitor this premium is to look at the wholesale numbers for selected Midwest cities that are posted on AXXIS.  The NYMEX/AXXIS difference was 20 cents on July 15, over a dollar in mid-September when Hurricane Ike struck, and is currently still 41 cents.  The AXXIS price has not dropped in half the past three months, and this may still be a hangover from the hurricanes.  It is also the first place I would look for gas gouging if I was the Attorney General.

4.  The Dynamics of the Retail Market.  As a journalist said to me last week, “Up like a rocket, down like a feather.”  We’ve documented time and again on this site how this works, with the big price hikes followed by the gentle day-to-day drops, while the wholesale price fluctuates in the background.  Our last price hike was during the September 12-14 weekend, when prices got up to $4.29 on 28th street.  Since then, the drops have been slow but sure — some days one or two cents, other days seven or eight cents.  In an area where there are several stations, one station decides to drop their prices a few cents because a cheaper shipment came in that day, and the other stations follow suit.  The point is that the retailers aren’t setting their prices based on trading on NYMEX.  They are setting it based on their costs, what their competitors are doing, and what sort of business they are getting.  Are the retailers making extra money right now?  I doubt it, as our monitoring indicates they are still dealing with high wholesale prices in the Midwest, and some of the gas in their tanks cost them $2.95 a gallon last week.  But prices continue to fall, slowly but surely.

All this leads to my latest prediction:  It looks to me like the chaos on Wall Street is dissipating, so energy prices are starting to stabilize.  I expect Speedway and friends will decide it is time to straighten up their prices, with a reset by the end of the week to $2.89.

Mr. Wholesaler, Tear Down Those High Prices!

Monday, September 15, 2008, 4:20PM:  I think we’ll look back on this weekend as the turning point for gas prices for quite a while.  On Friday and Saturday, there were price hikes to $4.09 and then $4.19, driven by fears of massive shortages due to Hurricane Ike striking Texas, and a sense that we were being deluged by our own hurricane.  In fact, a few Citgos in town went up to $4.29, and prices were temporarily above $5 in the central part of Michigan.  Whether we will be facing shortages and rationing remains unclear (and I suspect, unlikely).  What is clear is that as of Sunday night, Michigan and our friends Illinois and Indiana were stuck with the highest average prices in the country.  The gas price map on GasBuddy was glowing red in those states last night, and this afternoon, and the Governor and the Attorney General really need to investigate.

But, more volatility was in store.  NYMEX opened up over the weekend for a special session, and prices there plummeted.  It may be because the hurricane caused less damage to the energy infrastructure than feared, but it seems that the real reason is that some Wall Street financial firms are falling apart, and with it, the inflated prices at NYMEX and elsewhere.  Today, crude oil hit $96 a barrel, while NYMEX gasoline futures prices fell 20 cents since Friday and 43 cents since the beginning of September.

Patrick wonders if these price drops in New York will make their way to Ferrysburg, Michigan, which is where the rack rate is set for the Grand Rapids area.  It has to, and it will start very soon.  Expect lower prices starting tomorrow.

Diesel consumers: your price drops are here!

I think you’ll agree with me on this one- Diesel consumers have LONG awaited the price drops that gasoline has seen. Since gasoline has dropped mid-July, diesel HAS followed its drop on the wholesale market, BUT for some reason, those price drops really never made it to large chain retailers. Even as I write this, some of the SAME BRANDED stations have diesel prices ranging from $4.39 to a whopping and unreasonable $4.69! Its a rarity for Grand Rapids to see this sort of range for gasoline (Have I ever see gasoline price ranges of 30-cents on non-hike days?) Even this station pictured below had sold diesel for as much as $4.79 just days earlier… what is going on? I’d say there is some gouging here, but hey, the Attorney General’s office of this State seems to turn a blind eye to “gouging” (at least when I called a few weeks ago!)- but WHY? Who has donated money to him?

Diesel continues to trade lower. Stations in nearby Indiana have diesel as cheap as $4.19… the price drops should continue! SHOP AROUND is the best advice I can give you.

Just down the street at BP, take a look what diesel runs!


Retailers in trouble, but also colluding?

Comment on last Wednesday’s prediction: Prices jumped on Friday the 11th and again today, to a new record of $4.25, so the prediction was quite WRONG.

Tuesday, July 15, 2008, 8:45PM: If you follow my postings closely, one theme is that the retailers really aren’t making much money selling gas, taking in between 0 and 20 cents per gallon before paying the costs of running their stations. Is it possible, though, that the retailers aren’t doing so well AND there is some sort of collusion going on? Price behavior like this week’s makes me wonder. Nearly every time there is a price hike, Speedway hikes first, and the rest of the stations follow. This can happen without any information passing between competitors. However, when you see other stations hike first, like the $4.25 at the Marathon in Standale, while Speedway is dropping their price to $4.11 down the street, and then the next day Speedway is $4.25, I start to wonder which stations are on the secret price-hike mailing list. Yes, I know Speedway and Marathon are owned by the same corporation, but too often I’ve seen Marathon be the last to hike, and I can’t remember the last time they were the first. A few weeks ago, it was noted by others that Meijer’s appeared to be the first to hike one day. If there was a place for the media or an attorney general to investigate, I would say that they study the anatomy of a price hike, finding out who gets the e-mail and when.

Meanwhile, although prices re-set to $4.25 yesterday and today, a big drop in the wholesale price this afternoon will allow retailers to drop the price quickly if they want to. Maybe we’ll get back to under $4 after all. (Not a prediction!)

Lawsuit against Speedway/Super America/Marathon!?

I encourage ALL who are reading this to comment and speak up!! Leave your comments HERE

Kentucky Attorney General Greg Stumbo announced groundbreaking
litigation filed today in Franklin Circuit Court against Marathon Oil
Corporation, Marathon Petroleum Company, LLC and Speedway SuperAmerica,
LLC, charging the corporations with profiteering during the time of
emergency following Hurricanes Katrina and Rita. The companies are
alleged to have overcharged Kentucky consumers more than $89 million in
grossly excessive motor fuel pricing.

WHERE IS MICHIGAN?! I e-mailed Michigan Attorney General Michael Cox.

Read the full story here

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