After yesterday’s spike up to $2.85 we saw the bottom completely drop out of the Chicago market, and wholesale gas jump 13 cents to $2.29. This was for delivery to the Wolverine Pipeline, which covers the lower part of Michigan. With Speedway jumping up to $2.85 before this climb, and the price being specifically set for Michigan, $3 has just jumped into the realm of possibility for Michigan drivers.
And it isn’t just me saying this. Some guy calling himself a petroleum analyst for GasBuddy.com, Patrick DeHaan, also believes this is so. He said so on WOOD-TV 8.
So, I’d hate to say this, but $2.85 or less is looking pretty good come tomorrow at 9:30, as we may see Speedway break the $3 barrier, or come close at $2.99. Hold on to your hats, the pain hasn’t stopped, yet.
I am not sure what this means for Indiana and Ohio. It is quite possible we, too shall see a spike tomorrow as well. But it is hard to tell where we are getting our gas from. NY Harbor, Group 3 and Gulf Coast gas prices are almost 35 cents lower than the Chicago spot, and I wouldn’t be surprised if gas from one of those areas makes its way to this area. The price in this area will be lower, but to what extent? A spike is a possibility, but I’m thinking it would be much like last week, where we will ride out the last spike. But jumping into the mid to upper $2.80s wouldn’t shock me at all, either.
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!
Workers at the Holly refinery in Woods Cross have reached an accord on a new labor contract that calls for them to receive a 3 percent increase in their wages for each of the next three years.
As prices continue to fall here in the Midwest, the South has not yet forgotten the sting and pain that Hurricane Ike brought, roughly 3 weeks ago. Atlanta, GA is still suffering from periodic gas shortages and high prices. The same is occurring in other locations in the South. Here in Michigan it is relatively quiet with prices falling into the $3.50’s.
On the other side of Michigan, prices have dropped as low as $3.27 in Ypsilanti! Will we see that here, and furthermore, will we see under $3 anytime soon? YOU BET! I am definitely expecting prices to drop below $3 between now and mid-November (BUT… this depends on Hurricane season of course!) We also are looking forward to some refinery expansion projects coming online!
Projects due to be completed soon:
- Sunoco @ Philadelphia, PA (early 2009): Gaining 15,000bpd from a new Fluid Catalytic Cracker unit and 40,000-50,000bpd fro a new HDS
- Sunoco @ Toledo, OH (end 2008): 10,000-15,000bpd expansion
- ConocoPhillips @ Wood River, IL (2009): 135,000bpd, Crude Distillation Unit, Delayed Coker Unit projects
- Holly @ Navajo, NM (Q4, 2008): 20,000bpd expansion
- Motvia @ Port Arthur, TX (2008): 45,000bpd expansion (plus an additional 325,000bpd to be online in 2010!)
- Holly @ Woods Cross, UT (Q4, 2008): 20,000bpd expansion
- Sinclair @ Salt Lake City, UT (2009): 60,000bpd expansion
- Big West Oil @ Bakersfield, CA (2008): 19,200bpd (new Fluid Catalytic Cracker), 25,000bpd (Distillate Hydrotreater), 9,000 (Alkylation unit)… total of 53,200bpd!
- CHS @ Laurel, MT (Aug 08): 15,000bpd expansion
Wow! Going back in time, we’re also at 17,610,000 barrels of daily capacity at U.S. refineries, almost 500,000bpd more than when Katrina hit in 2005, and the highest amount in history!
With slowing demand, I’ll bet some refiners are having second thoughts…
Look for prices to continue to fall!
BP has generally been my station of choice for quite some time, but things have slowly been starting to frustrate me with many of the local BP stations (look at GRGP tonight! ALL the high priced stations are BP! ELEVEN!). For one- while they had been typically running 9-cents more for a higher grade, they now run 11-cents higher. IE- $3.99/$4.10/$4.21 That irritates me to no end. Speedway had adopted the 10-cent rule a few years back after having gone as little as 7-cents higher per grade. So why has BP suddenly decided they need more than 9-cents? I wonder if it has something to do with more and more cars requiring premium fuel, like one of mine.
Next, today BP decides that its going to try its own hike, to an astounding $3.99! What in the heck is going on? I must say the BP at 28th and Wilson is perhaps the only BP around with decent management… they went from $3.85 or $3.88 (can’t remember) to $3.78 late tonight.
Next time I think about going to BP, maybe I’ll elect for a station with better tactics than most the BP’s.
Again, please read- the BP at 28th and Wilson is NOT one of the BP’s I’m referring to. Here is a list:
Port Sheldon St & 28th Ave
36th St SW & Buchanan Ave
44th & Division
Kalamazoo Ave SE & 60th St SE
10 Mile & US-131
E Division & Wolverine
Plainfield & Woodworth
Fulton & E of Bronson
West River & US-131
Alpine & Coventry
E Division St near Stebbins Ave
Unless these BP stations change their habits, I’d like readers to know what kind of crap these stations are pulling. They are trying to pull a fast one. Even “almighty” Speedway didn’t reset to $3.99! They chose 14-cents LESS per gallon.
Gouging anyone? I’m done with said stations unless they change their practices.
As you may or may not know, last night a Citgo station in Kentwood (52nd and Kalamazoo) was priced at $3.87 on the street. However, once at the pump, customers noticed the $2.87 and greedily filled up without saying one word to the station’s employees.
It is appalling to me that this went on for nearly four hours while the station owner (NOT BIG OIL) lost thousands of dollars.
For those who don’t know, the station owner paid Big Oil $3.65 per gallon for the gasoline and WILL STAND TO LOSE the difference between the $2.87 and $3.89.
It is frustrating that every single one of the idiots who paid $2.87 lacked the ethics to tell the station employees what was going on.
I guess I can understand how other countries view us, heck, even I understand.
And back to the basis: BIG OIL STILL WON, SMALL INDEPENDENT RETAILER LOST.