Please ship some extra gasoline to the Midwest

Friday, May 11, 2007, 1:30 PM:  Looking at the price hikes of 5/3 (to $3.25) and 5/10 (to $3.29), it is as if the margin retailers are using has jumped from 20 cents to 50 cents.  That, of course, isn’t true, and we can tell from the fact that prices did not drop down into the $2.80’s before yesterday’s hike.  So, the more likely situation is that we still have the 20-cent margin, but the “Fudge Factor” right now is an unprecedented 30 cents.  That is, there is a 30-cent differential between the NYMEX estimate of the wholesale price and the actual wholesale price in the Midwest.  This is consistent with what we are seeing on the national gas price map.  Sadly, NYMEX prices jumped several cents yesterday, which means that while prices will naturally fall a bit over the weekend, they won’t fall very much.  And then we’ll see how things look early next week.

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  1. I look at the NYMEX prices several times a day and I never pay any attention to what the actual price is, just how much the change is. Since, our rack prices normally change the around the same as the NYMEX price.

    I just read your post and decided to take a look. The NYMEX price is 2.29 right now and our rack price today is 2.68. So, I can see how you would be confussed.

    We have about a 5 cent margin today, so that’s why Speedway is moving to $3.499. That price is a bit high, so I assume that Meijer won’t go the full amount again.

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