Sunday, December 28, 2003

I am going to start using the “This Week in Gasoline” site to estimate what needs to be added or subtracted from NYMEX prices to get the wholesale price for the Midwest. Over the past few weeks, that site has reported a six-cent difference in prices between there and here, and that has worked out perfectly for a “Chicago Winter Discount.” Last Monday, that difference was reported as three cents. So, putting it all into the formula (with SG=-3), we get a 20-cent margin price of $1.57. Given where prices are right now (low $1.40’s), I’d expect a price hike, perhaps as early as Monday, to around $1.57. On Tuesday, the price hiked … to $1.57! Very CORRECT!