Tag: refinery

Price restoration in Speedway States? 50/50 odds to $1.999

Not very solid on this folks, maybe 50/50, but I think we’re awfully close to a “price restoration” in Speedway States to maybe $1.999. Like I said, I don’t feel as confident on calling this hike as I have on others, but I think that some stations dropped prices following the markets closing price on Monday. However a poor DOE report reversed any loss in wholesale prices.

We’re also barely clinging to a “Chicago Discount”, which is just over a penny per gallon. Gasoline coming out of Chicago is actually the most expensive gasoline in the nation east of the Rockies at the moment, likely due to refinery issues here. We should see gasoline being diverted out of the South and East because of the conditions here. Refiners and wholesalers can fetch a few cents more per gallon here because of those conditions so I expect the Midwest to soon have higher supplies as everyone rushes to send us gasoline (and take advantage of a few extra pennies profit per gallon).

So- a hike tomorrow to $1.99? Not completely sure, but what’s better- gasoline for $1.88 or $1.99? I know gasoline won’t get much cheaper in the next few days… I took the risk and filled up tonight for $1.83 after discount. If I were you, I would too!

Patrick

Speedway States prepare for more price hikes!

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!

Follow-up on likely gas price hike… “triple whammy”

As I said earlier today, gasoline prices are likely to jump across all Speedway States as soon as tomorrow to $1.99 or even higher.

I’ll follow up and let you know what’s going on.

As you may know, Midwest prices have been seen as low as $1.59, much lower than the national average today of $1.891 according to AAA’s Fuel Gauge Report. A large reason of lower Midwest pricing as of late is that PADD 2 storage levels have reached high levels, untypical for this time of year. I have said that we’ve recently benefited from this, what I call a "Chicago Discount". The "Chicago Discount" is due to a regional condition causing Chicago "Spot" Pricing to be lower than other areas.

Now onto the bad news.
Yesterday, ExxonMobil reported shutting down a unit at its 238,000 bpd plant just outside Chicago, IL (Joliet), which would cause a large drop in output at Midwest refineries. This, coupled with news from the DOE that regional stockpiles fell last week, as well as a huge nationwide drop in gasoline stockpiles, will cause a large price spike.

Any Chicago Discount will likely "dry up", and with the changeover to the April gasoline contract also adding to a hike. The gasoline contract for March, expiring today, was 8-cents lower than the new April contract, which takes effect tomorrow, causing a "triple whammy": More expensive April contract begins tomorrow, Refinery outage regionally, and a loss in gasoline stockpiles will definitely cause higher prices.

I would be *shocked* if prices don’t rise tomorrow and stations that purchase new fuel tomorrow would lose money if they do not raise prices.

I am unsure about the amount of the hike, but it may be over $2/gal, as soon as tomorrow morning.

Be sure to fuel ASAP.

Refinery strike temporarily delayed by 24-hours

The USW union has just announced that negotiations with refinery operators have improved, and have delayed a strike by 24-hours.

While it may not seem like much of an extension, it is good news that talks are finally getting somewhere. It is yet to be seen if the next 24-hours will yield the progress that the USW is looking for.

Any news of an agreement would come as a welcome sign to U.S. consumers who are relying on cheaper gasoline to help them get through short-term struggles.

Basically, any price hike that might have happened Monday may get pushed to Tuesday if no new agreement is announced… so a hike is still possible if a strike is not averted.

This is welcome news as progress is being made to avert a huge spike in gasoline prices as a result of a strike so rest easy tonight!

Patrick

Union authorizes strike Sunday, oil companies making contingency plans

As I prepare to head to Canada this weekend (and possibly away from the internet) I wanted to update everyone.

The likelihood of a strike by the USW (United Steel Workers), the union that represents 30,000 workers, has risen. Both union officials and refining companies continue to make emergency plans, with union workers voting to authorize an IMMEDIATE strike at 12:01am Sunday morning if a new contract is not made. Oil companies on the other hand have alerted temporary workers and standby workers, with the USW warning that these workers are "minimally trained". No surprise they say that, the USW union has significant interest in worrying Americans so that a contract to their favor will be the result of such action.

The union is NOT in my opinion, in any position to lobby for such lavish benefits at this time. Refinery margins are negative, and will continue to be for some time to come. Union workers seemingly want a "piece of the pie" as oil prices hit records of $147 this summer. Perhaps one should ask if union workers would then mind paying the oil company when the refinery is in the red and losing money.

Many Americans should lobby against the union as their action (strike) would likely cause gas prices to skyrocket overnight, leaving Americans without jobs in a dire situation, and even Americans WITH jobs in a bad situation. Unfortunately for the USW, it seems like Big Oil holds the important cards in this decision, with only BP PLC saying they will shut refineries if there is a strike. ExxonMobil, Shell, Valero, and other players have either publicly stated or signaled they are preparing replacement workers.

If it was you, wouldn’t just having a job in this economy be enough? Apparently not for this union- they are asking for raises for every year until their next contract expires. They also want a safer work place, and I really can’t blame them. To lump a raise from a safety issue? A bit weak.

The actions of 30,000 union workers mainly seeking more pay and benefits has the potential to disrupt millions of American’s stability if gas prices rise as a result of refineries shutting down.

The United Steel Workers Union represents refinery workers at nearly half of U.S. refineries, which refine roughly 17.6 million barrels of oil per day.

Not only that, but it looks like we may have a price hike in Speedway states tomorrow. $1.99 seems the likely target as it seems that the Chicago Premium has dried up (look how low we got! $1.73!) We’ll see.

Watch the news Saturday night and be ready to fill up to avoid any potential gas price increases as a result of the USW union strike.

Patrick

 

Wholesale prices stable

Comment on the January 14 posting:  Prices hiked to $1.99 the next day, so the prediction was CORRECT. 

January 28, 2009, 7:20 AM:  I haven’t been posting the past two weeks because I’ve been struggling with the head cold that has been going around and doing a lot at work, and the wholesale prices have been pretty stable and calm.  As of this morning, we have the same wholesale prices we were looking at on January 9.  There are concerns about a refinery strike, but those concerns haven’t affected NYMEX or AXXIS prices yet.  Given where wholesale prices are, and with prices dipping below $1.80 in the area, it would not be surprising if we got a reset back to $1.99 by the end of the week, but it would also not be surprising if prices continued to drop slowly.  Yes, that’s quite a non-prediction, but what it means is I have no edge in "The Game" this morning.
 

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