Tag: dollar

A weak dollar puts us in another pickle

Chicago Spot: $2.11 UP 0.0616
Fair price adjustment: 0.7948
Fair Price: 2.7662
Average selling price 2.7150
Margin over cost + profit: -0.0512

We are in dangerous territory. The commodities market is up yet again, this time on a weak dollar. Fair price is at break even, which can mean a spike is close at hand. But, we have already had a spike this week, so another one is not as likely to come. But we just came off a weekend where the margin was thin, and Speedway might not want to repeat that again. But the last time commodities spiked up like this (in May) Speedway lagged behind so much that Indiana gas stations lost money on the sale of fuel. But… well, you get the idea.

It would be prudent to watch the prices as they may climb going into the weekend. Indiana could see $2.75-2.80, Michigan and NW Indiana could be 5-10 cents higher. Or, we could see prices stagnate or drop very slowly… only the people in Ohio know what will happen.

Is Speedway the #1 gas brand?

Recently I came upon an article that stated Speedway was ranked the number one gas brand for the fifth quarter in a row. It is a part of a multi-brand survey put out by Harris Interactive as the EquiTrend Brand Survey.

In the survey they ask people about different brands in different categories like favorite hotel (Marriott), fast food (Subway) and favorite airline (Southwest). They say they base the survey on six base measures including familiarity, quality, purchase consideration, brand expectations, distinctiveness and trust. A seventh was added this year due to the economy, value.

So, the big question is, does Speedway deserve this award? To help find that out, first I want to review my experiences at Speedway for you here. Then I want to hear from you in the comments and see what you think of the brand.

Speedway is a pretty familiar brand in these parts. They are the 800lb gorilla in the Indiana, Michigan and Ohio markets, so I can see them ranking high in this area. They also have a good ad campaign.

For gas, I haven’t had any that was bad quality in my life. Most gas comes from the same rack anyway depending on the area, so quality in gasoline is really a moot point to me. The quality of the store on the other hand sometimes leaves a lot to be desired.

Speedway stores come in three kinds; large lot, medium lot and small lot. Most of the large lot stores are of higher quality. They have a big enough lot that even with 10-14 pumps, maneuvering is easy, and there is usually parking right in front. The inside of the store can typically be a little cramped, especially when busy up near the cashiers. There is a wide selection of chips, candy, snack cakes, fountain and pre-packaged drinks, and store prepared food.

The medium lot stores carry 6-10 pumps, and are a little tighter to maneuver in. You usually have to park on the side of the store to park legally, although some people squeeze in parallel to the front of the store. The store inside is much more cramped, and the selection suffers a little, too. The feel of quality is diminished here because the shopping experience is just not as good.

This is nothing compared to the small lot stores, which have 4-6 pumps, not even enough room to park in front of the store, have a very small selection of items and more than two people inside the store is pushing it. I have seen quite a few small lot stores demolished and rebuilt, re-branded to Rich stations, or just let go. They really drag down the quality of the brand in my eyes.

The inside of the store is usually clean, and I also give them good marks for clean bathrooms. Generally while cramped, the shelves are usually well stocked, and organized. Cashiers are sometimes rude, but overall I’ve had good experiences with them. Sadly, the free air to pump up my tires is now gone, one of my biggest complaints as of late.

Everybody’s heard of the Speedy rewards program. It’s free to sign up, and you can use it to get free stuff on purchases at Speedway. It has been a declining program, as a whole, however. At first you could get 10 points a dollar on any purchase. But as gas prices increased, they dropped the points you could earn for fuel purchase to 10 points per gallon. I used to be able to save up enough points to get a car wash 2-3 times a year (around 5000 points) but now I just use it to get the occasional soda (750 points).

For fuel purchasers like me, it’s not much of a reward program anymore, unless of course I go inside to buy a $50 gas card for fuel purchases, which puts an instant 1000 points on top of the 200-300 I’ll get for fuel purchases. They have also had 5 cents a gallon off during the weekends in September. They also say they have a surprise for us in November. Also, if you signed up for the Speedway MasterCard from Chase, you’ve seen your points diminish as well, as Patrick has commented on here previously.

So, is Speedway the best C-Store experience for me? I would have to say my favorite C-Store is BP. They are almost always three things; never crowded due to the size and spacing of the store, friendly, and clean. Of course, that’s just my experience in Indiana. I’d like to see more MotoMarts here as well after my visit to St. Louis in the dead of summer this year. Nice, big, clean, well stocked and besides flavor shots for your fountain drinks, they also have energy shots. Yum and zoom.

So, what are your thoughts on Speedway? And what do you consider the best gas brand out there?

What’s next? $3?

After yesterday’s spike up to $2.85 we saw the bottom completely drop out of the Chicago market, and wholesale gas jump 13 cents to $2.29.  This was for delivery to the Wolverine Pipeline, which covers the lower part of Michigan.  With Speedway jumping up to $2.85 before this climb, and the price being specifically set for Michigan, $3 has just jumped into the realm of possibility for Michigan drivers.

And it isn’t just me saying this.  Some guy calling himself a petroleum analyst for GasBuddy.com, Patrick DeHaan, also believes this is so.  He said so on WOOD-TV 8.

So, I’d hate to say this, but $2.85 or less is looking pretty good come tomorrow at 9:30, as we may see Speedway break the $3 barrier, or come close at $2.99.  Hold on to your hats, the pain hasn’t stopped, yet.

I am not sure what this means for Indiana and Ohio.  It is quite possible we, too shall see a spike tomorrow as well.  But it is hard to tell where we are getting our gas from.  NY Harbor, Group 3 and Gulf Coast gas prices are almost 35 cents lower than the Chicago spot, and I wouldn’t be surprised if gas from one of those areas makes its way to this area.  The price in this area will be lower, but to what extent?  A spike is a possibility, but I’m thinking it would be much like last week, where we will ride out the last spike.  But jumping into the mid to upper $2.80s wouldn’t shock me at all, either.

Speedway eliminates instant discount, raises points required on best items in Speedy Rewards program

In a bad PR move for Speedway, they’ve decided to eliminate instant discounts for all of Speedway Chase Mastercard members and raise the points needed for redemption of the best benefits for all of the chain’s Speedy Reward customers.

If you aren’t already aware, Speedway had decided back in March that it was going to eliminate the instant discount that its credit card users received purchasing gas at the pump. While this discount was small, it was the premise for many individuals signing up for Speedway’s Chase Mastercard. The program had been going for years. Initially, Speedway was doing it month-to-month, but that change became permanent as gas prices climbed. Now that prices have come down, Speedway has eliminated the instant discount, perhaps alienating many of it’s best customers (including yours truly if you didn’t know)

While that baffled me, what irked me even more was the letter I got just a week or two ago from Speedway. Again, this letter was in regards to the additional benefits millions receive. Again, it was a negative move, requiring it’s Speedy Rewards members to save more points for similar items. Starting May 1, the Speedy Rewards program is ELIMINATING the $100 Speedway Gas Card that had previously required 66,000 points. They are replacing it with a $100 gas card that has a whopping 3-cent discount per gallon (of regular gas- for midgrade it’s 5-cents, and for premium, 7-cents) of gas purchased using the card. This 3-cent “price rollback” is essentially a new feature that will cost users 30,000 more points. This new $100 card “with 3-cent rollback” will cost Rewards members 96,000 points. Here are some numbers showing the difference and providing the REAL COST:

At today’s price of $2.059 per gallon, the current $100 gas card will get you:
48.57 gallons of regular

At today’s price of $2.059 per gallon, the FUTURE $100 gas card “WITH ROLLBACK” will get you:
49.29 gallons of regular

So basically with the new system starting May 1, you will get 0.72 gallons more for a near identical item. HOWEVER, the new gas card will cost 96,000 points compared to the old 66,000 points.

66000pts= $100 gas card = 48.57 @ 2.059
96000pts= $100 gas card = 49.29 @ 2.059

Using 2.059 per gallon, if you used the Speedway Chase Credit Card, you get 40 points per dollar at Speedway. The amount of time it would take under the old program and new program to get the $100 card:

WITHOUT USING SPEEDY REWARDS:
PRE-CHANGES $1650 (801.36gals @ 2.059) on Chase card = free 48.75gals
POST-CHANGES $2400 (1165.61gals @ 2.059) on Chase card = free 49.29gals

USING SPEEDY REWARDS AND SPEEDWAY CHASE MASTERCARD:
PRE-CHANGES $1471 (714.6 gallons @ 2.059) on Chase card AND Speedy Rewards card = free 48.75 gals
POST-CHANGES $2140 (1039.41 gallons @ 2.059) on Chase card AND Speedy Rewards card = free 49.29 gals

When the new “Rewards” system is active on May 1, it will now take you roughly 45% more time to save to a near identical item. Sure Speedway isn’t changing the points needed for their in store food, they wouldn’t want to hurt their profit loaded in-store business, right? Ha. Back to using my BP card? Let’s do the math:

Here’s the math on comparing the two:
Speedway’s old system of points meant every $1650 gives you roughly $100 of free gas which means it was roughly 6.1% off purchases/gasoline there if you always saved for a $100 gas card.
Speedway’s new system of points means every $2400 gives you roughly $100 of free gas which means it’s roughly 4.17% off purchases/gasoline there if you always saved for a $100 gas card.
BP’s system is easy- 5% off all BP purchases which means every $100 gives you $5 of free gas, meaning it’s exactly 5% off purchases/gasoline there without having to keep track of points.

With Speedway, I’ve gotten probably $250 in “rewards” since 2006. With BP, I’ve gotten exactly $800 in rewards since 2002 (although I put many more everyday purchases on the BP card).

After doing all that math, I can only say one thing:
Goodbye Speedway and your fountain drinks!

Speedway- let me know when you’ve raised rewards. I should add for those curious, BP has ONLY raised rewards, never lowered them. In this economy when every dollar counts, I’ll not only save my money on not buying fountain and frozen drinks at Speedway, but I’ll be getting a better deal at BP.

30-cent Chicago Discount means you’re paying TOO MUCH!

A very unlikely situation (a good situation) has developed here in parts of the Midwest. I’ve noticed a trend that has resulted in much lower wholesale prices for the Chicago PAD District. Gasoline coming out of Chicago (which is most gasoline supplied to West Michigan), is currently DISCOUNTED nearly 30-cents from what it’s being traded at on the NYMEX. Chicago wholesale spot prices for regular unleaded are $0.9972 tonight $0.972 this morning! (Yes, that’s under a dollar before tax and transportation costs) This is a result of refiners trying to sell off their remaining stocks of Winter blend gasoline before they are required by law to start production of lower polluting Summer blend gasoline. This discount will only last until the Winter blend is gone… think of it as a clearance sale!

Speedway and friends, LOWER YOUR PRICES! You’re making a killing- why can’t you pass this savings on to your customers? I take aim at Speedway since they were the first to rise to $2.05.

To benchmark, last week we only saw a discount of 7 to 9-cents off NYMEX prices, which meant that the same gasoline Friday was bought for $1.25ish per gallon. Any station taking delivery any time soon will be absolutely awash in profit since this Chicago Discount has really kicked in this week.

I ask that stations pass the savings they are getting onto consumers, or hey, at least HALF?!

$1.9X prices are too high. Where is $1.75? Let’s go stations. Lower your prices! The first METRO GR  non-club station under $1.80 will get a THUMBS UP from me on this blog if it happens this week (lets see if anyone takes me up on that offer).

Patrick

 

A painful memory- something to be thankful for…

It’s been quite a downhill in gas prices since nearly three months ago. I remember filling up at $3.77 thinking it might go up. It’s been about two months since that day and gasoline really has only taken one temporary price hike. Let’s all be thankful. Don’t dive into that too much, it comes at deep expense- our economy, livelihood, freedom, and more. We’re in a recession, and it couldn’t have come sooner- food prices had been grossly inflated, energy prices were sky high, etc. In my mind, as I’ve said, this was the only way to fix the problem- a recession. I hope none of you have lost jobs because of it (which is why I said cheaper gas comes at a high cost), but if you have, I hope you find work soon. I am blessed to have a job.

Anyway, here’s where we were in early September:

Today:

For a 20-gallon fillup, the net savings is $2.59/gal, $51.80 CHEAPER PER FILLUP.

9.0 million barrels of gasoline consumed daily according to the DOE… savings PER DAY for the United States since peak:
9*42=378,000,000gal/day*2.59= $979,020,000 SAVINGS PER DAY.

That’s almost a billion dollars per DAY that we’re saving from the peak. Amazing.

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