If you haven’t already, do look at the previous post Ed put out about gouging in Michigan. These are good reads for those interested in the oil industry, too.
Now, on to business. With a spike up in everything oil/gas/diesel, we are very ripe for a spike tomorrow. I’m putting it at about 65% possible. The margins for Michigan and Indiana just fell below 0 today after riding a period of profit taking. It’s possible we won’t see a jump tomorrow as Speedway and the other stations wait for the weekly DOE report Wednesday for which direction we should see for the end of the week. But it’s been a while since the last one, I’m betting on a spike up to the $2.67-2.73 range.
Do fill up tonight/early tomorrow as spike protection.
I want to publicly congratulate Patrick on this step forward in his career. He had been keeping me abreast of his conversations with GasBuddy, and I was anticipating when this day will come.
When Patrick joined up with me a few years ago, The Gas Game was just a hobby of mine. Some of you may recall my article in the Grand Rapids Press in 2002, along with my web site at gvsu.edu, as examples of this hobby. With Patrick’s hard work, thegasgame.com became something special, with a great logo; RSS, reader comments and other tools to expand access; and several other obvious and hidden enhancements that have increased the visibility of this site. Thank you, Patrick, for all the work you’ve done on this site.
Patrick and I have gone through a lot with this site the past few years. The explosion of gas prices from below $2 to $4.25 brought us a lot of attention, and the dizzying drop this past year back below $1.50 has been amazing, too. Due to all the news about gas prices the past few years, the site has been noted in media from Chicago to Washington, DC.
I don’t want to make it sound like we’re done now. I will continue to post regularly to the site, making my comments and predictions about gas prices and possible hikes. But with Patrick moving to Gas Buddy, postings on this site will be less frequent, and, as you may have noticed, I tend to focus on connecting the price of the futures to retail prices and pay less attention to refinery issues and Speedway rewards programs. My quiet study of diesel continues, and I expect to have something intelligent to say about diesel pricing before the end of the year. And, perhaps I’ll get another featured writer for the site.
Comment on the March 21 prediction: Prices rose to $2.09 on the 24th, so the prediction was CORRECT. We’ve seen slow drops since then.
Thursday, April 2, 2009, 2:45 PM: NYMEX is up 9 cents today, making me nervous about a price hike on Friday, back to $2.09 or maybe even higher. Yes, let’s make that a prediction.
Turning to diesel prices, I continue to monitor retail prices but I haven’t figured anything out yet. I will note that at my benchmark Speedway station on Lake Michigan Drive, prices dropped for weeks to get down to $1.92 on March 19, but three price hikes and a small drop, it is at $2.15. On my “to do” list for the summer is to see if I can figure this out.
That’s right, I expect another good jump in gas prices, as soon as tomorrow (Friday) in many Speedway States. Speedway did not raise as high as anticipated resulting in a higher risk of a price hike sooner, and the wholesale market was up a large amount today.
Wholesale spot prices from Chicago rose 13-cents today and close at $1.35/gallon, nearly a 40-cent rise since Monday! Prices have risen about 15-cents today, but stations are going to be very eager NOT to lose money and will likely be forced to make a larger second hike. In my opinion, Speedway is probably upset that they only raised prices to $1.85 when they really could have gone higher. Now they might be forced to deal with negative PR with two price hikes. Will they hold out to Monday to avoid some negativity? Its happened before, but as you can see, they’re still losing a LOT of money per gallon with their small 15-cent hike. Prices at Speedway would need to jump to $2.05 to equal the same price on the wholesale market tonight.
We may see Speedway attempt to raise to $2.05 in a very odd fashion, or you may see small stations attempt to rise first with a very disorganized Speedway hike- I’m not sure how it will happen, but I am led to believe it WILL happen and SOON!
Diesel prices around the Midwest should be dropping below gasoline prices in many areas as well. Refiners have already begun to boost gasoline production but it looks like with stronger than average demand, prices will continue to advance higher.
There also continues to be small refinery disruptions nationwide tonight with multiple refineries in Louisiana having issues.
There is also belief that since Oil has broken the 50-day moving average, we are in the beginning stages of a rally in oil prices, which would mean my opinion that we have “rounded the corner” (Spring run up in prices) was correct, but we’ll need to wait and see.
One thing is for sure, if you delayed or forgot to fill up, it is still better to fill up at $1.85 than $2+.
Speedway States prepare for higher prices!
Today’s DOE report definitely wasn’t so hot- showing a large loss in gasoline stockpiles when an increase was expected. Traders polled were expecting a small 500,000 barrel increase in gasoline stockpiles and the DOE reported a loss of 2.6 million barrels.
In an interesting twist, supplies in storage in the Midwest region actually rose over a million barrels, which may cause the Midwest to see prices staying under the national average for some time.
Refining continues to be a poor money maker, but with this news, I expect wholesale gasoline prices to climb, causing refiners to slowly increase production due to increasing margins.
Speedway has been all over the map in the Midwest lately, with a hike last week in Minneapolis, and a hike yesterday in the Great Lakes area. While most of the nation should see slowly increasing wholesale prices, the Midwest should feature either flat wholesale prices or rising disproportionately slow compared to the rest of the country.
On another note, Diesel should slowly become cheaper than gasoline in many areas of the country over the next few months as driving season approaches.
States that have recently seen Speedway price hikes (this week) should be stable without a huge price hike (barring some large news maker), but areas outside the Midwest will continue to see prices climb.
That’s right- you folks with the diesel trucks may FINALLY get to see diesel under $2 again, something maybe you thought (and I) that you wouldn’t see again in your lifetime!
The Pilot station in Burns Harbor, Indiana (about a 1.5-2 hour drive from Grand Rapids) is currently selling diesel at $2.01. Now, you definitely would not drive down there just to get fuel, but if you’re taking a trip to Chicago, fill up there.
I wonder when and if UPS will EVER give up their fuel surcharges now that diesel prices have come down. I highly doubt it, I’m sure they love the extra income it brings!
I don’t see Midwest prices going up anytime soon, in fact- I see a Chicago Discount building in. Midwest PADD storage was at 52.5 million barrels yesterday in the DOE’s weekly report- a GREAT number to be sitting at. Refiners will start having to sell that winter blend fuel at discounted prices once Summer comes closer…
Midwest prices should fall into the $1.70’s. I’ll be watching the market closely, a price hike may happen sooner rather than later.
I’ll be taking vacation to sunny Florida next week, so posting may be lacking.