Thursday, June 11, 2009, 1:15PM: The extreme price jumps in the Chicago market continue to sort themselves out, and this report indicates that while NYMEX has been climbing (follow the UGA ETF for a quick read on that), Chicago wholesale prices have been falling. So, using a $2.07 NYMEX/Chicago wholesale price, I calculate a range of $2.61-$2.82, which means I can comfortably predict that prices will continue to fall into next week, at least to $2.69.
Tag: wholesale prices
Tuesday, May 26, 2009, 1:55 PM: Woe to us. Prices rose at random places on SATURDAY to $2.59, and today Speedway is making sure we understand with a system-wide re-set. The new price in Michigan is $2.69 a gallon. There are two separate issues here: one is the relentless climb since April 27 (when gas was $1.99 a gallon). The other is what happened this weekend.
The relentless climb could be just a delayed seasonal effect, as we get these moves every year in March and April, often related to the switch to summer blend gasoline. I think, though, that after the stock market recovered from that scary low in early March, the speculators are looking to make money again and driving up wholesale energy prices is a way to do it. I have some confidence in this observation because it isn’t that retail demand for gasoline is on the rise, and gold prices have been climbing lately, too.
As for this weekend, there are some goofy things going on in Chicago. I learned this morning that wholesale prices went up a lot on Friday in Chicago and that’s what caused the hike to $2.69. Now, this morning, they’ve dropped almost a dime a gallon, and maybe, just maybe, we’ll see that in our retail prices by Wednesday. That’s a wish, not a prediction.
Comment on Sunday’s warning: It wasn’t so much a prediction as a warning — to fill up on Monday morning — and it was a CORRECT warning, as prices rose that day to $2.39.
Thursday, May 14, 2009, 8:25 PM: Wholesale prices continue to climb, and the 20-cent margin price this evening is $2.44. With a good number of places at $2.25, that means there is a decent chance of a price hike on Friday. I am not going to go so far as to call this a prediction, because it feels like a 50/50 chance to me. But be extra vigilant for the guy with the number stick on Friday.
Wednesday, May 6, 2009, 7:30 AM: Another price hike yesterday — to $2.29 — and it starting to feel a bit like the first half of 2008. I write this because wholesale prices shot up 20 cents over the past week, so retail prices have followed, and we have our highest prices of the year. Last year, wholesale prices seemed correlated to the stock market, and if you have been following, stocks have been doing better lately. I also understand there are some short-term supply issues right now connected to switching over to the summer gas formulation. I don’t anticipate another hike this week, but Patrick’s $2.50 prediction for this summer is reasonable. I don’t want to think that far ahead.
Looking at morning numbers briefly this morning before an interview on WOOD AM1300, I think I might have to announce that I’m expecting a price hike soon to $2.19! A quick look at closing prices on the market from late last week and yesterday:
Thursday close $1.42
Friday close $1.47
Monday close $1.54
As you can see, wholesale prices are up a whopping 12-cents since just Thursday! While I believe Speedway’s price hike Friday to $2.15 was over done to provide more profit for their Saturday/Sunday Speedy Rewards discount, I now believe that they will raise prices again to keep up with wholesale cost.
Another contributing factor is the switchover to Summer blended gasoline which costs more to make. Refiners were required starting Friday (May 1) to only sell Summer blended fuel after that time. Retailers have until June 1 to make sure they have it in their tanks.
At last check, the Chicago market is suffering a huge Chicago Premium for RBOB gasoline (ethanol blended gasoline, which nearly all retailers sell). The Chicago region was paying nearly 18-cents more per gallon than any other region. Chicago is currently trading RBOB Unleaded at a 21-cent PER GALLON premium to NYMEX pricing.
I’m led to believe we’ll see a jump to between $2.15-$2.25. I’ll pick $2.19.
Gasoline demand is starting to rise so don’t think this is a shock to see higher gas prices. At least we’re not paying $3 or $4/gallon!
Let me just say how surprised I am that Speedway raised prices today. I think everyone should be able to see how out-of-line this price hike was as it stunned many.
Wholesale gasoline prices closed down a good amount yesterday, so why did Speedway raise prices? Good question.
And while we’re on the topic, Speedway is crippling its Speedy Rewards program effective May 1. Did something happen? Loss of 5-cent Speedway Credit Card discount on April 1, Speedy Rewards points “adjustments” May 1, what’s next? Oh well, guess I’ll have to find a new place to get fuel.
There was no reason for prices rising today except to increase profit margin (especially with the huge loss on the market yesterday)!