Wednesday, August 17, 2005

This is what I am seeing right now: low price in town is $2.65 in Wyoming. Gasoline futures down hard today, almost 9 cents a gallon, corresponding to a new 0-cent margin price of $2.48 and a 20-cent margin price of $2.69. That would lead me to a prediction of lower prices continuing through the weekend.However, I received an e-mail today from a new friend of mine in the gasoline industry. He wrote the following before the big drop in the futures market today: “This week is one of those times that using the futures prices instead of actual rack prices is hurting your predictions. For some reason wholesale prices have been much higher. On Monday morning the futures price was $1.9870 and our price at the Muskegon rack was $2.0545 giving a giving a $2.602 zero cent margin price and $2.782 for a 18 cent margin (Speedway’s restore price works out to 18 cents most of the time when I use rack prices), so the $2.799 was the right price for them to go to. Monday night the futures closed down like 4.3 cents and we got a 1.5 cent increase. Last night the futures closed 1.25 up and we got a 7 cent increase to $2.1404 (about 16 cents over this morning’s futures prices). So, today, our zero cent margin is around $2.693 and I’m looking at a prediction of Speedway going to $2.879 tomorrow based on today’s [wholesale] price.”

So, it could go either way, couldn’t it? No official prediction from me today.

There was no price hike on Thursday or Friday, but prices haven’t gone down much, either, at least here in Standale.

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