The Big Prediction… as requested.

A quick note on filling up before I get into the “Big Prediction”:
Keep your tanks near full. Wholesale prices have climbed to around 2.05, which might give us a hike to 2.69-2.72. Rather safe than sorry! Thanks to Meijer for keeping Speedway in check. Meijer raised prices to 2.55 while Speedway tried to jump to 2.65. Many Speedway locations had to come back down.

Now… on to the “Big Prediction”

I’m sure with summer coming and gas prices hovering mid-$2, you’re all curious whats in store for later months. Before I start this prediction, I’d like to explain how hard it is to be extremely accurate. It is tough- almost like a Winter Snowfall estimation in October. Predicting summer gasoline prices can be just as difficult.

So… here we go.

It is my prediction that this summer will not bring $3 *average U.S.* gas prices like that past few summers. With summer months ahead of us, I would not be surprised to see other folks (analysts, whatever you call them) say we’ll see record high oil and gasoline prices. Before you believe these analysts, check if they hold stock in oil or gasoline companies. Many times they do and thus try to send prices higher.

Lets take a trip back in time to understand my prediction.

About a year ago, Grand Rapids prices were about the same, near 2.65. The price rise we’ve seen since January is mostly thanks to continued refinery maintenance. Last year at this time there were many more problems thanks to Hurricanes Katrina and Rita mowing over the Gulf. Last year the U.S. was also dealing with the phasing out of the ground-water contaminating additive MTBE. We also dealt with ultra high ethanol prices as it was learned MTBE would be replaced with an ethanol-blend.

Back to this year. No lingering hurricane effects, no switching additives or blends. Just a loss in production from refinery maintenance, which we should see come back online within 3-4 weeks. However, we’re seeing the same price as last year, so whats the deal? We’re in store for a correction I’d say. Read on…

Last summer after we cleared up the problems from past hurricanes and the new ethanol blend, the wholesale gasoline contract had a HUGE selloff. Remember? We didn’t have a price hike for nearly a MONTH here in Grand Rapids as prices slid roughly 85 cents last fall.

Now that we’ve cleared out those past hurricane and additive problems, I can’t see how prices can continue to climb. Besides the same news we’ve been dealing with for what seems years now (Iran, OPEC, higher demand, etc) there is nothing new. Even BP has their Alaska pipelines all figured out by now. Could we see a correction in wholesale prices once refiners start their all-out gasoline production in 3-4 weeks? I think we just might see that correction.

Doesn’t it seem that recent headlines that had nothing to do with gasoline may be effecting us way more than it should? (IE- Iran taking 15 British soldiers) Why did gasoline futures go up 8 cents that day? Some financial firms seem to be running that headline nonstop in hopes of fueling a gasoline price rally.

I’m almost waiting for a oil company to come out and give some news of a refinery having problems in the next 3-4 weeks and then having prices spike another 15 cents. That may happen as they try and get a bigger margin out of oil, but I think we’re near the top, folks.

I think this year that Spring/Early Summer will see the highest gas prices, and remember- we still have a month or two before its over.


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