After watching the market the last week, I’m semi-convinced that we’re starting to see the “Spring Run-up” in prices. Last week gasoline traded roughly 20 cents cheaper on the wholesale market, and today, we’re at 2.40+ on the wholesale market. Last year, the run-up began in late January/early February. The question is- how high will we go?
Thats a tough call at this point- refiners aren’t producing much because of the terrible profit margins. Thus we’re seeing refinery utilization rates in the mid-80’s. Yesterday’s DOE report wasn’t the best, supporting the bulls on the market, and with the cold weather, fuel will be in higher demand.
At this point, I believe a national average of $3.50 or more is likely with this year’s run-up. However, the heart of the Midwest produces much of the U.S. supply of ethanol. Will that help keep our prices slightly lower? Perhaps. Usually Michigan is slightly higher in the Spring than the nation, so we’ll have to see. The worst is yet to come, so if you want, fill up all your storage containers, because it will get bumpy!
Patrick
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