Tag: Chicago Premium

Price jump soon (today?) to $2.19?

Looking at morning numbers briefly this morning before an interview on WOOD AM1300, I think I might have to announce that I’m expecting a price hike soon to $2.19! A quick look at closing prices on the market from late last week and yesterday:
Thursday close $1.42
Friday close $1.47
Monday close $1.54

As you can see, wholesale prices are up a whopping 12-cents since just Thursday! While I believe Speedway’s price hike Friday to $2.15 was over done to provide more profit for their Saturday/Sunday Speedy Rewards discount, I now believe that they will raise prices again to keep up with wholesale cost.

Another contributing factor is the switchover to Summer blended gasoline which costs more to make. Refiners were required starting Friday (May 1) to only sell Summer blended fuel after that time. Retailers have until June 1 to make sure they have it in their tanks.

At last check, the Chicago market is suffering a huge Chicago Premium for RBOB gasoline (ethanol blended gasoline, which nearly all retailers sell). The Chicago region was paying nearly 18-cents more per gallon than any other region. Chicago is currently trading RBOB Unleaded at a 21-cent PER GALLON premium to NYMEX pricing.

I’m led to believe we’ll see a jump to between $2.15-$2.25. I’ll pick $2.19.

Gasoline demand is starting to rise so don’t think this is a shock to see higher gas prices. At least we’re not paying $3 or $4/gallon!

Patrick

Union authorizes strike Sunday, oil companies making contingency plans

As I prepare to head to Canada this weekend (and possibly away from the internet) I wanted to update everyone.

The likelihood of a strike by the USW (United Steel Workers), the union that represents 30,000 workers, has risen. Both union officials and refining companies continue to make emergency plans, with union workers voting to authorize an IMMEDIATE strike at 12:01am Sunday morning if a new contract is not made. Oil companies on the other hand have alerted temporary workers and standby workers, with the USW warning that these workers are "minimally trained". No surprise they say that, the USW union has significant interest in worrying Americans so that a contract to their favor will be the result of such action.

The union is NOT in my opinion, in any position to lobby for such lavish benefits at this time. Refinery margins are negative, and will continue to be for some time to come. Union workers seemingly want a "piece of the pie" as oil prices hit records of $147 this summer. Perhaps one should ask if union workers would then mind paying the oil company when the refinery is in the red and losing money.

Many Americans should lobby against the union as their action (strike) would likely cause gas prices to skyrocket overnight, leaving Americans without jobs in a dire situation, and even Americans WITH jobs in a bad situation. Unfortunately for the USW, it seems like Big Oil holds the important cards in this decision, with only BP PLC saying they will shut refineries if there is a strike. ExxonMobil, Shell, Valero, and other players have either publicly stated or signaled they are preparing replacement workers.

If it was you, wouldn’t just having a job in this economy be enough? Apparently not for this union- they are asking for raises for every year until their next contract expires. They also want a safer work place, and I really can’t blame them. To lump a raise from a safety issue? A bit weak.

The actions of 30,000 union workers mainly seeking more pay and benefits has the potential to disrupt millions of American’s stability if gas prices rise as a result of refineries shutting down.

The United Steel Workers Union represents refinery workers at nearly half of U.S. refineries, which refine roughly 17.6 million barrels of oil per day.

Not only that, but it looks like we may have a price hike in Speedway states tomorrow. $1.99 seems the likely target as it seems that the Chicago Premium has dried up (look how low we got! $1.73!) We’ll see.

Watch the news Saturday night and be ready to fill up to avoid any potential gas price increases as a result of the USW union strike.

Patrick

 

Temporary respite in gas price hikes likely… prices to fall!

After the expected Speedway hike to $1.99 Tuesday, we can expect a break in gas price hikes as the DOE released a favorable report on weekly oil inventories today.

The report on oil and gasoline stockpiles contained some very good (bearish) news for the markets. It was expected that oil inventories were to gain 800,000 barrels last week while they actually gained much more than that- an astounding 6.7 million barrels. Gasoline inventories also gained much more than expected, to the tune of 3.3 million barrels. Traders were expecting very small gains in both and news of such a large gain prompted thoughts of the weak economy and recession we’re in and prompted selling.

Midwest stockpiles (PADD 2) also gained a healthy amount jumping from 46.8 million barrels to over 48 million barrels.

All of this news comes at a good time for Midwest gasoline consumers who had been taking a hit as Midwest storage had fallen to levels not seen since 2007. We can expect that gasoline prices have a temporary drop in Midwestern states (Indiana, Ohio, Michigan), and that any “Chicago Premium” will either drop off completely, or become a “Chicago Discount” as we see PADD 2 reach higher levels not seen since before Thanksgiving (2008).

As many know, wholesale prices may rise the remainder of the week negating my comments below, but if wholesale prices do not rise, we could see areas in the Midwest drop into the $1.70s… keep in mind ONLY if wholesale prices do not rise soon.

Patrick

Are you ready? Coming soon: $2.99

Posted by mobile phone:
I hope you’re prepared, West Michigan… we’re going to see $2.99 soon!There have been large selloffs in gasoline that will benefit the Midwest the most. Other areas of the country aren’t paying a price premium like we are, and that’s started to dry up. A few days ago the Chicago premium was 40+ cents per gallon and now its fallen to 20-cents. I’d be shocked if we did’t see $2.99 or less in the next few weeks.

Another lousy DOE report, Speedway hikes to $3.95

Edit: Speedway has just hiked to $3.95 in Michigan; while not totally shocking, this is something that might have been expected. The Gas Game gets quite difficult to predict at times like this!

Another disappointing report from the Dept. of Energy this week, we can look for gasoline to trade higher today.

Perhaps due to the Hurricane/Tropical Storms last week, the DOE reported refinery utilization at just 85.9%, with crude oil inventories falling 400,000 barrels (LOOP was closed [Louisiana Offshore Oil Platform] last week) which likely altered crude import numbers, but gasoline… OUCH! Gasoline inventories fell a massive 6.4 million barrels last week, putting us now in the lower part of the average range, and putting us almost exactly at the same amount of gasoline in inventories as this week in 2007.

In a month we’ve consumed 14.3 million barrels (600.6 million gallons) of gasoline more than were refined. Amazing! Look for that stat to perhaps spook traders as they see some bullish numbers coming in. I definitely expect gasoline to trade higher today, perhaps triggering a hike in the Grand Rapids area… more on that later today IF necessary.

Also, the SPR is STILL adding barrels to its massive storage?! Didn’t the Dept. of Energy state that with oil prices so high they were going to delay deliveries to the SPR in mid-to-late July? It hasn’t happened! This week the SPR sits at 707.2mb, last week 706.8mb and last year at 690.3mb. Just more empty promises from government to do something positive for the market.

Look for gasoline to pull oil higher as traders get some bullish news.

Patrick

PS- Midwest PADD storage fell to 48mb this past week, look for the Chicago Premium to start hurting soon!

Price rehike likely for Friday Morning for Speedway States!

Fill’er up tonight! After a 7-cent drop yesterday on the market, prices have *already* shot right back up to what they were at the market open on Wednesday. $4.15 has been a popular re-hike amount lately, but I expect between $4.19-$4.25 tomorrow in Michigan depending on today’s final numbers. Since Midwest PADD dropped significantly this week, I think we might start having a little bit of a Chicago Premium to add, thus the $4.19-$4.25. Other states such as Indiana and Ohio may be a few cents less.

The DOE report yesterday was good for the most part, oil inventories posted a surprising gain, gasoline inventories rose if you exclude a drop in blending components, but Midwest PADD suffered and dropped 2 million barrels.

So, back to the re-hike discussion! A hike is likely, although not imminent, and may not happen yet tomorrow, BUT with prices under $4 happening, they are NOT likely to get ANY cheaper, so find a station under $4 and fill up tonight!

(I got gas for $3.93 yesterday!)

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