I hate times like this. I am 50-50 on whether we get a spike tomorrow. I’m torn between near break even margins (at least if you are looking at the fact that Indiana wholesale adjusted should be lower than the spot price by about 5-10 cents still) and the fact that we had two spikes last week. Margins do say spike, but history says patience. Do be prepared and find someplace cheap tonight or friendly/spike resistant tomorrow, because the numbers say we should go up. But we are too close to call.
The numbers suggest (with Indiana at -3 cents margin and Michigan holding on at 1.8 cents margin) a spike is possible tomorrow. History shows, however, that two spikes in a week are really rare. With margins this close to break even, that makes the likelihood that a spike will happen to be very low.
If you need a fill up and can get gas in the $2.30s in Michigan, or below $2.30 in Indiana, you may wish to do so tonight as spike insurance. But like all insurance, you may not cash in on it.
It looks like speculators are getting the boot when it comes to gas and oil. As of this morning they continue to fall as more bearish fundamentals are being used to control the market. What this means for you is even lower prices in gasoline.
Currently the average price of gas is beginning to catch up to wholesale, which has dropped more than 30 cents since it’s high on June 30th. Margins are at about 10 cents, from a high of 25 cents last week as prices have dropped 20 cents since July 2nd.
If wholesale were to flatten out now, we could see our prices level out in the low $2.30s. But the forecast is for wholesale to drop even further. Widespread $2.20s could greet the end of the week, and the near future could give us some stations into the $2 teens.
Comment on my June 30 posting: Prices reset to $2.69 on July 1, except for places where it had never fallen below $2.69.
Monday, July 6, 2009, 6:30PM: Wholesale prices have dropped significantly in the past week. With today’s close, I have the 0-cent margin price at a pretty $2.25. So, unless there is a dramatic reversal on NYMEX the next few days, the prediction is lower prices, with drops of at least 2-4 cents per day.
Comment on my June 23 posting: Prices have continued to fall for a week, so the prediction was CORRECT.
Tuesday, June 30, 2009, 9:30PM: I just want to share what I am looking at right now. The moderate jump in wholesale prices this week has given us a 0-cent margin price of about $2.45 and a 20-cent margin price near $2.69. Yet, this is also the range of prices right now in the area, with gas below $2.50 in Allendale and at $2.69 in Ada and Lowell. So, we could get a price hike before Independence Day to $2.69, but some places wouldn’t notice. Or, the stations at $2.69 could drop their prices while stations near $2.49 will probably keep their prices constant. So, I don’t feel like a prediction is warranted, but I hope readers understand the underlying dynamic right now. — Ed Aboufadel
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.