Tag: Chicago Premium

GR Gas Prices: Hike to 2.39… Justified?

Well, out of nowhere, again, Speedway initiated a price hike to 2.39. Expected? No. Suprise? Not after last weeks “unexplainable” hike to 2.35 (that oddly enough reverted down to 2.17 in areas).

After I got some feedback from everyone on last weeks hike (thanks for the e-mails by the way), I did some digging to see if there was ANYTHING that could have possibly explained why we in the Michigan area are suddenly paying much more than average (U.S. average is now 2.18).

I dug up some information on local gasoline supplies (out of Chicago). The reason why we get really cheap sometimes is because of this. Our local supply sometimes swells in the summer, making Grand Rapids “very” cheap. However, that is now reversed… and we’re paying a “Chicago Premium” for gasoline.

Here are some numbers for you to see why we’re paying the “Chicago premium”:
Our PADD (Storage district) had roughly 54.5 million barrels of finished gasoline in storage on OCTOBER 13. The next week (Oct. 20) when the DOE report came out, we were down to 51.9. That tells me that the second largest refinery in the U.S. in Gary, Indiana, was (and perhaps still is) undergoing maintenance. Now, on October 27, our PADD storage is down to “just” 50 million barrels.

We’re paying more because of refinery maintenance and strong demand. Isn’t it interesting that once gas prices get down to 2.19 that we have all sorts of “maintenance”?

We should see our local storage go up as we enter early November and as refineries come back online after undergoing routine fall maintenance.

Be patient. 2.39 is high (It will probably come down to 2.30 in a decent amount of time) but it is mostly justified.

After thinking just two weeks ago that we might make it down to $1.XX, I think those chances are now nil.

~Patrick

Another price hike to $2.59?

Another price hike to $2.59? What is going on here? I’ve been laying low this month because I am having trouble figuring this out. The weekly report that the DOE publishes on gas prices (tonto.eia.doe.gov/oog/info/twip/twip_gasoline.html) does indicate that wholesale and retail prices in the Midwest are running at least 10 cents higher than for New York, and that explains the “Chicago Premium” we are paying right now. Also, frequent price hikes like we have seen lately occurs when wholesale prices are rising sharply. In the past, Speedway et. al. haven’t let retail prices drop to the 0-cent margin price when frequent wholesale prices occur.The question is why are Midwest prices so high right now? My Gas Buddy pdhaudio says the (Midwest?) refineries are slowing down production. Let’s keep an eye on this, and let’s worry, because NYMEX is up 9 cents today, as of this writing! There was another price hike on Thursday the 16th to $2.65. It was not enthusiastically embraced by all retailers, though.

Monday, March 10, 2003

Wow, another move up in oil and gasoline futures late last week. Combine that with some sort of Chicago premium this winter, and a certain red-tinged retailer’s aggressive maintenance of their margins lately, and that means another price hike this week, to $1.89. I imagine this will happen on Tuesday, again. (The only time in my memory that gas was this price was the night of 9/11/2001.) Well, I was about 1/4 CORRECT and 3/4 WRONG. Prices didn’t go up until Thursday, and then only to $1.79, and then only at certain stations. By Saturday, prices were $1.72 again in Standale.

Monday, February 24, 2003

Well, the first letter to the GR Press appeared on Friday, but prices continued to drop, as low as $1.54 this morning in some places. (Although they are near $1.70 elsewhere.) Frankly, despite predicting a rise to $1.79 two weeks ago, I was surprised when it happened, as my spreadsheet calcuations were suggesting $1.69. Figuring some new 10-cent Chicago premium was in play, that’s why I thought we’d see $1.79 again last week. Forgetting that now, my calculations indicate if a price hike occurs this week, the new price will be $1.69 or so. However, some stations are close to that now, so I’m not sure what to think. Hmmm, that means fill the tank! Today! More or less CORRECT, as prices rose on Tuesday the 25th, but they went up to $1.79. Then, on Thursday, there was a ten-cent drop, which I found a bit bizarre.

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