Wednesday, June 30, 2010, 2:45PM: I was on vacation last week, but I see we had a price hike to $2.89 that was surprising to me. My wife and I were in Quebec, and gas prices there were about $1.06 per liter, which translates to about $4 per gallon (using the conversion that 1 gallon is about 3.8 liters, and 1 dollar US is about 1 dollar Canadian). So, I’d rather be playing the Gas Game here in Michigan. One dollar a liter sounds so much more innocent than $4 a gallon. As far as current prices in the region, we’re ranging from $2.78 to $2.89 a gallon. The stock market has been sliding the past several days, so, of course, we have wholesale prices dropping, and they are down 11 cents since the last price hike. That puts the 0-cent margin price around $2.60. So, we have some room for prices to drop, and that is my prediction for the rest of the week and into Monday. — Ed Aboufadel
Tag: gas prices
First, an answer to the question I asked in the poll recently. The majority was right, as currently Michigan (9.4) and Indiana (8.9) are above 7.5 cents, while Ohio is at 6.5.
Now, the next question. Is being in a Speedway state a good thing? You do get roller coaster rides of prices, with big 20-30 cent spikes followed by prices falling 2-3 cents a day otherwise. But on average, how good are our gas prices. Hey, I’ve got numbers, let’s see where they fall:
Simply put, almost every state Speedway is in has a lower average than the national average. In states where Speedway dominates it’s even lower. Indiana, Michigan and Ohio are 11.1, 9.9 and 9.2 cents below the national average (tax adjusted) this year. Minnesota’s SuperAmericas (which will soon be sold, along with the Marathon infrastructure there) are 7.1 cents below the national average, and Wisconsin and West Virginia are also below. Only Illinois and Kentucky are above the national average.
So the big question is, what do you want? Gas prices that are on average below the national average and volatile prices? Or prices that are steady, but higher? I’ll don’t like Speedway’s way of doing business, but I’ll take lower prices every day of the week.
It will be interesting to see what Minnesota’s prices will do when Speedway is gone. The guy that gave me the idea to start the Spike Line has a similar thing he does, and he might not have to do that anymore.
Recently there was an article and news story on WCPO in Cincinnati about Speedway. In it they said a lot of things TheGasGame readers would already know, plus something I found interesting at first, and one outright falsehood.
They come right out of the gate letting us know Speedway’s secret: Real estate.
“We wanted to know how Speedway is able to change its prices market-wide without fear of what the station across the street is going to do. What we discovered is that in most cases, there is no station across the street.”
They used Google Maps and Street View to confirm that 63 out of 92 had no direct competition. This is how they are able to raise prices and not worry about the competition. I had never thought of this before. I started mapping Indianapolis Speedways, and sure enough, 30 of the 52 stations there have no direct competition.
I thought about this revelation a little further, and it really isn’t a Speedway thing. I found about the same ratio of other branded stations have stand alone stations compared to ones having competition. And then, it is also rare to see a Wal*Mart next to a Meijer, or Target; and a Lowes next to a Home Depot. Seems Speedway’s secret isn’t much of a secret at all. Not to mention they don’t do anything to prove this is why Speedway raises prices the way they do.
Then there is the outright falsehood.
“The vast majority of Speedway locations jumped to $2.65 with no corresponding spike in oil prices. Oil futures did go up 3.2 percent the day before, but gas prices in Cincinnati shot up by nearly four times that amount. And oil prices were actually falling while our gas prices were rising that Tuesday.”
The article and story was run on the 25th, but the spike up in prices happened on the 17th. Oil went up on the 17th, not down. Also, oil does not set the price of gas in this area (the PADD II). That would be the Chicago Mercantile trading of the Chicago Spot.
An analysis of the Chicago Spot from November 9th to the 17th shows that while it rose from $1.8218 to $1.9224, the average price of gas fell, almost 11 cents in Indiana, 9 cents in Michigan and 13 cents in Ohio. The Speedway spike caused averages in those three areas to go up 17 cents in Indiana, 11 cents in Michigan (with higher UP prices included), and 22 cents in Ohio.
They were far from jumping up with no correlating spike. They did not even meet the difference in each area. A 10 cent rise added to how the average fell in each area shows Speedway undercut Indiana by 4 cents, Michigan 8 cents and 1 cent in Ohio.
The rest is stuff we here at TheGasGame have been preaching a long time, long before even I came along. Speedway is the leader, selling 1 of every 5 gallons of gas. They have more corporate stations that any other. After Speedway rises, others follow, a statement that flies in the face of the earlier revelation that Speedway stations have no local competition.
If you haven’t visited the “Speedway Effect” article here at TheGasGame, I suggest you do so. You’ll learn far more accurate information than you did with this article. Also, if you have followed me at my Fair Price threads in the GasBuddy forums in Indianapolis, Indiana and Michigan, you can see I have discovered the pattern, and can pretty accurately predict when a spike will happen.
My new feature here at TheGasGame continues that. It’s called “The Spike Line”. It is a new name for what I have been doing all along in the “Fair Price” threads. It’s just a more accurate title. When the Spike Line is crossed, you can expect a spike up in prices from Speedway, it’s that simple. If there are other circumstances to cause or prevent a spike I’ll let you know that there as well. It’s just another way that TheGasGame is helping you save money. It’s one of the big reason’s I am proud to be a part of it.
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?
Comment on the August 18 prediction: Prices rose on August 20 to $2.59, so the prediction was CORRECT.
Monday, September 7, 2009, 6:00 PM: The past two weeks have been very busy for me, but gas prices have been tame, except for the unusual price adjustment a week ago, where Speedway and others raised prices a few cents, but there was no state-wide reset of prices. That is going to come this week, particularly with gas down to $2.26 this weekend in Lowell. I predict a price hike, perhaps as soon Tuesday, to somewhere in the range of $2.49-$2.59. I know many stations are $2.49 today, so maybe they don’t see a hike, but it is hard to be more precise right now. Looks like I am in agreement with Bill. — Ed Aboufadel
The stat line goes like this:
Fair price: ( $1.9374+$0.6413 ) = $2.5787
Average selling price – fair price: ($2.537-$2.5787)=
Margin over cost + profit: -$0.0417
In other words, for Michigan, you are selling at more than a negative 4 cent margin by my numbers. In Indiana that is more than 6 cents, and that’s with 5 cents taken out of the fair price due to the Indianapolis rack being so much lower than Chicago’s. This usually means spike. But we are going into a weekend, and Speedway rarely goes up on Saturday and never has on Sunday since I have kept track.
I have seen weekend spikes up in price from local retailers. Companies like Schmuckal Oil in NNW Lower Michigan, Wesco in W Lower Michigan and Atlas Oil in Indiana, a few in Michigan and Kentucky (check out our links page to see their websites and see if their is a station in your area.) Meijer also has spiked up on the weekend.
My point is we are very close to a spike, and we may see the price spike up over the weekend/early next week. Keep an eye on your local retailers, as they may spike up, even if Speedway doesn’t. Good luck out there.