Tag: retailer

Expected Price Calculation

The basic idea to make predictions is to develop an estimate for the retail price for which retailers are not making any profit.  In our postings, this is sometimes called the “0-cent margin price” or the “Spike Line price”.  As the retail price gets closer to this price, a reset of 15 cents or more becomes more likely.

To compute the price, we have to take into account an estimate for the wholesale price, a variety of taxes, and miscellaneous items (e.g., middlemen, freight, and storage fees).  Tax rates are set by the Federal government and state governments, and the miscellaneous items stay relatively stable.  So, the key number to focus on from day-to-day is the estimated wholesale price.

There are a number of ways to estimate the wholesale price.  One approach is to combine the RBOB quote with this RBOB/CBOB comparison quote.

The formulas for the current calculations can be found on our Spike Line page.

— Ed Aboufadel

Math/Stats/Data

This page is filled with great information on the math behind gasoline prices, the stats of hikes, days they are most likely to occur, and the data behind why prices rise and fall. This information is about as raw as it gets, meaning it is hard to understand for some who haven’t looked at it before. We’re posting it to show what we do to try and win “The Gas Game”.

First of all, see how Ed calculates the expected price. It is a formula that takes in many numbers from different sources.

Secondly, see what day a gas price hike is most likely. Ed’s data reflects over six years experience of monitoring gas prices.

Third, try and read the Weekly Petroleum Status Report from the Department of Energy. This report can greatly effect local prices and market prices. It is released typically on Wednesday mornings at 10:35am Eastern Time.

If you aren’t bored yet, another good summary of a week’s petroleum usage is the data report “This Week In Petroleum” (Gasoline Section). It is raw numbers, graphs, and data from the nation’s oil companies and refiners. It contains some of the same information found in the WPS report.

Some other good information and data about gas prices can be found on gasoline retailer’s own websites. Some retailers even list their current fuel prices at some of their stations. Some that do this are Speedway, Pilot, and Flying J. Definitely monitor many stations across the country for a large snapshot!

All of these pages that are listed are a GREAT source of information for why gasoline prices go up and down. The government reports especially play in to prices. After the reports are released, traders read them and see if there are any surprises. Before the reports are released, traders are typically polled to check their expectations of the governments report. If the report is worse than expected, traders buy oil and gasoline contracts, and wholesale prices rise. If the report is better than expected, traders sell oil and gasoline contracts, and wholesale prices fall. This is part of the reason why most gas price hikes are Thursday: the report is released Wednesday, traders react, and pump prices either rise the following day or they remain the same or fall if the report is good.

Today’s Grand Rapids Gas Price Trend:

Some more good resources to check out:

Oil and Gasoline News from MarketWatch | Speaking of Oil with Tom Kloza | Energy Information Administration | AXXIS Petroleum- Price Services | List of U.S. Oil Refineries, Capacity and Location | U.S. Refinery Expansion Plans/Updates | Michigan Gasoline/Product Pipeline

Helpful Images:

Areas where RFG (Reformulated Gasoline) are required by the EPA

Areas where RFG (Reformulated Gasoline) are required by the EPA

More information and links to data may be posted here at any time, so stay tuned! In addition, if you have any good information/stats/data that you think should be added here, e-mail Patrick. The address is on the left side of the main index page.

Hard to be a prophet during hurricane season

Comment on the August 25 prediction:  Prices did drop into the $3.70’s from $3.89, but not significantly due to the hurricanes.  To be fair, I’ll label that prediction WRONG.

September 9, 2008, 7:15 AM:  With the fall semester up-and-running at GVSU, I am planning on posting each Tuesday morning this semester.  Using NYMEX alone, the 0-cent margin price this morning is $3.29 and the 20-cent margin price is $3.50, yet the lowest price in town is something like $3.67.  NYMEX oil and gas prices continue to trend down, but the AXXIS numbers remain stubbornly high, and I believe that has been contributing to retail gas prices that aren’t in any hurry to drop substantially.  The same NYMEX/AXXIS difference occurred a year ago and didn’t resolve itself until mid-October.  Back then, a reasonable estimate for the wholesale price was the average of NYMEX and AXXIS, and if we use that again, we get a retail range of $3.58-$3.79.  So, while I would hope that prices drop below $3.60 soon, we aren’t really set up for a prediction I would have any confidence in.

In addition, there is a comment from “Retailer” on our web site that prices to retailers went up 15 cents yesterday afternoon, which is often a harbinger of a price hike.  I am going to wimp out and not make any predictions today, though.

Gasoline & Oil trade higher as Ike approaches the Gulf

Better plan on filling up tonight or first thing Monday morning, folks.

The oil and gasoline market opened overseas just moments ago and has already jumped enough to force a price hike. At this writing, gasoline is up 8-cents per gallon. Local gasoline retailers aren’t making more than 10-cents per gallon today, and with a large hike, it is very likely we’ll see a hike to $3.899-$3.959 tomorrow.

Hurricane Ike is currently a Category 3 storm over Cuba. I’ve just reloaded the wind forecast table from the NHC, and it looks much more promising (good) than even last time it was updated!

While Ike’s landfall hasn’t yet been pinpointed, it looks as it will track west of where Gustav blew through.

I would definitely fill up tonight (like I did for $3.66)!

Patrick

P.S.- I’ve made some slight changes to the interface- bolded the post titles, and put the date, author, and comments DIRECTLY under the title instead of the bottom of the post. If you have feedback, e-mail me!

Diesel consumers: your price drops are here!

I think you’ll agree with me on this one- Diesel consumers have LONG awaited the price drops that gasoline has seen. Since gasoline has dropped mid-July, diesel HAS followed its drop on the wholesale market, BUT for some reason, those price drops really never made it to large chain retailers. Even as I write this, some of the SAME BRANDED stations have diesel prices ranging from $4.39 to a whopping and unreasonable $4.69! Its a rarity for Grand Rapids to see this sort of range for gasoline (Have I ever see gasoline price ranges of 30-cents on non-hike days?) Even this station pictured below had sold diesel for as much as $4.79 just days earlier… what is going on? I’d say there is some gouging here, but hey, the Attorney General’s office of this State seems to turn a blind eye to “gouging” (at least when I called a few weeks ago!)- but WHY? Who has donated money to him?

Diesel continues to trade lower. Stations in nearby Indiana have diesel as cheap as $4.19… the price drops should continue! SHOP AROUND is the best advice I can give you.

Just down the street at BP, take a look what diesel runs!


Presenting $3.XX gasoline…

Its been such a long time it seems that I’m proud to announce we should be seeing $3.XX gasoline (as low as $3.89) in Grand Rapids in coming days as wholesale gasoline prices continue what seems to be a correction.

Gasoline lost another 10.34-cents today, marking a near 40-cent slide since the week began.

Unfortunately for some retailers, they purchased fuel at the worst possible time: the day before the slide began and are going to be stuck selling it at a loss. As soon as stations sell off their gasoline that they paid at the peak of the week, expect prices to nosedive. We’re already seeing $4.08’s roll around in rural areas, and we can expect even bigger decreases *everywhere* by the time stations get rid of their expensive fuel, which may take a few days.

Today’s STATION cost for gasoline according to a regular poster was hovering near $3.80, so we definitely have quite a bit of play in prices. Hold off on filling up until prices get cheaper and only pump what you NEED for now! (IE- less than a full tank)

Patrick

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