Comment on the September 13 prediction: prices have drifted lower and lower the past three weeks, and we are in the $3.20’s in some places now. The prediction was CORRECT.
Sunday, October 2, 2011, 10:00AM: It is the beginning of October, so let’s reflect on where we are at with gas prices. Our last price hike was on September 8, with prices rising to $3.89 in the Grand Rapids area. Since then, wholesale prices (via Bloomberg) have dropped 40 cents, while retail prices have dropped 62 cents, and you can find gas for as low as $3.22 in town. The drop in gas prices has mirrored the drop in stocks, as usual. Looking to next week, the 0-cent margin price right now is about $3.15, and when the 0-cent margin price is close to the retail price, that is when a price hike occurs. So, unless wholesale prices drop further on Monday and Tuesday, we are setting up for a price re-set this coming week, to $3.39. Keep an eye on prices while you drive. –Ed Aboufadel
5:58 p.m. Sunday
At 4:51 p.m. today, a GasBuddy reported a price of $3.699 at the Plainfield Ave. / I-96 Speedway in Grand Rapids. Assuming this was an error (the second highest reported Grand Rapids price is $3.399 and only at 6 locations), I checked Speedway’s website. To my surprise, Speedway’s website also reports that price for that location. The second highest Speedway in Michigan on their website is $3.549 in Cheboygan. Will all Michigan Speedways go up to $3.699 tomorrow, to recover for their losses since Wednesday?
I don’t see anything out of the order on Speedway’s website for Indiana stations, but there are two in Ohio well above the third highest price of $3.499: $3.759 in Lancaster and $3.719 in Hamilton. These might just be very rural stations that are the only ones for tens of miles around or something and are always quite high.
For the moment, that $3.699 in Grand Rapids makes it tied for 4th highest price in Michigan. Speedway stations are not normally among the highest prices in the state. Tied for second highest price in Michigan at $3.799 are the BP by Detroit Metro Airport and a Marathon in New Haven. A Citgo in Detroit takes #1 with $4.099. I don’t know if I should assume that Detroit price is incorrect or not. If it was $3.099, it would be the second lowest price in all of Detroit. The map shows the stations nearest that one are two at $3.359 and two at $3.259.
In the Kalamazoo area, the BP in Kalamazoo Township on Ravine Rd. went back down to $3.359 as of 7:12 this morning. Meanwhile, the Marathon not far away in Oshtemo Township on W. Main St. near U.S. 131 was reported up to $3.559 at 3:14 this morning. All other locations in the Kalamazoo/Plainwell/Paw Paw area are reported $3.259-$3.399.
Current averages:
$3.377 Michigan (up 1.5¢ in the past 24 hours)
$3.351 Detroit (up 1¢)
$3.346 Ann Arbor (down 5.5¢)
$3.335 Kalamazoo (down 0.4¢)
$3.305 Flint (up 1.3¢)
$3.292 Grand Rapids (up 0.2¢)
$3.225 Lansing (down 2.2¢)
6:35 p.m. Sunday
The Grand Rapids Plainfield Ave. & I-96 Speedway now appears on GasBuddy’s site as temporarily closed.
I don’t see that I’ve posted this “60 Minutes” story from January 11, 2009 before. It is about the effect of speculators in the crude oil market:
http://www.cbsnews.com/video/watch/?id=4713523n&tag=mncol;lst;2
Among the things said in the story are Enron got the oil market deregulated in 2000, which is the year I remember high gas prices first became an issue (when they first approached $2). The story says the supply and demand of gasoline has become disconnected from the market price. One interviewee says 60-70% of oil future contracts are held by investors who have no intention of taking physical delivery of the product.
10:31 a.m. Monday
It appears Speedway’s not making a move today.
November New York gasoline futures are down 10.71¢ since going up 10.76¢ on Tuesday, September 27.
November New York crude oil futures are down $1.09 this morning to $78.11, down $6.34 since going up $4.21 on Tuesday, September 27.
Just looking through the achrives. Last Oct the barrel of oil was trading in the $75-80 range and we were paying $2.60/gallon. Why are we paying 3.30/gallon with crude trading in the same range?
Ryan, I would guess that because oil prices have just gone below $80 this past week, that the reduced cost of oil hasn’t found its way to a reduced price at the refinery. There is also something going on with better margins for refiners this year that I don’t quite understand.
Dieter: I filled up this morning for $3.22 a gallon, on the 28th Street.
12:14 p.m. Monday
Retailers are eager for Speedway to raise prices. Over the weekend, at least 3 Kalamazoo area stations raised their prices. All 3 went back down because they couldn’t convince their competitors to go up.
This morning, the Quick Stop Marathon on Stadium Dr. in Kalamazoo has gone up to $3.449, as reported at 11:14 a.m.
In Grand Rapids, a BP in Hudsonville went up to $3.499 as of 10:45 a.m.
Unlike the other large Michigan cities, both Kalamazoo and Grand Rapids areas are heavily influenced by Speedway on the high end. Seldomly do independent stations try to raise their prices before Speedway.
Speedway apparently does not have as large an influence in Berrien County, where several stations successfully went up to $3.459 over the weekend. Currently, 4 stations in St. Joe and Stevensville are reported at $3.459. Seven stations are reported up to $3.399. Stations in the Benton Harbor/St. Joe area had been around $3.199-$3.299.
You might need to adjust your formula. You are about 10 cent too low on your 0 cent margin again
10:45 a.m. Tuesday
Another quiet day for Speedway. The independent gas stations in Hudsonville and Oshtemo Township that tried to go up yesterday are back down. All but 3 stations in the Benton Harbor/St. Joe/Stevensville area are back to $3.299 or below.
New York November gasoline futures are currently down 2.96¢ to $2.4814, on top of a 2.71¢ decrease Monday. The May 2012 contract is currently $2.4821. By the time we get to the March/April retail run-up next year, I’m sure you’ll wish you had bought that contract now.
November WTI oil is down $1.40 today to $76.21. That follows a $1.59 decrease yesterday.
Excluding membership-only warehouses, Grand Rapids retail prices currently range from $3.199 to $3.399 with a metro average of $3.254.
In the Kalamazoo/Plainwell/Paw Paw area, retail prices range from $3.249 to $3.399. In the immediate Kalamazoo/Portage area, prices range from $3.279 to $3.359 plus the Clark on Gull Rd. that went up to $3.399 yesterday. The metro average is $3.312.
IR, I’ll take a look at that. My “0-cent margin price”, though, is not necessarily the price paid by retailers as it is the place where, if we hit that point, we usually get a price hike. I suspect that retailers are probably losing money at that point, as opposed to breaking even. I do have it on my “to do” list to review my calculations in the next few weeks and see if any revisions are necessary.
I agree with Ed. The Spike Line Price is often thought of as a Zero Margin price, but in reality, it is as labeled, the price to watch, for the closer the stations get to it (or farther under it), the more they desire a price reset. The entire charting and predicting is done with publicly available data, strong analysis, and the application of a theory with labels that has a great track record. It is not meant to represent and summarize the knowledge of individual station delivery contracts. It is simply an applied formula to assist in predicting the best time(s) to buy gasoline in the retail markets so’s not to get caught with an empty take the day after a 30¢ price reset. Thank all you folks here.
Ed I would be happy to email you the price I pay daily for a while if that would help.
9:10 a.m. Wednesday
Today’s wild independent is the BP in Richland (Kalamazoo County), reported up to $3.699 as of 7:06 this morning. Yesterday morning, this station was reported at $3.259. This new price is high enough that I think it is an error. There are no wild independents reported in the Grand Rapids area, where the highest price is $3.369 at Broadmoor Convenience Store in Caledonia.
The lowest non-membership club price in Grand Rapids is now $3.189, reported at 10 non-membership club locations. The lowest Kalamazoo area price is $3.239 at 6 locations in Plainwell and Otsego. $3.279 at two locations is the lowest price near Kalamazoo/Portage.
New York November gasoline futures are currently up 4.81¢ to $2.5365, after falling 2.26¢ yesterday. November WTI oil is currently up $1.92 to $77.59, after closing down $1.94 yesterday. Chicago gasoline fell 2.27¢ yesterday to $2.5571.
10:45 a.m. Wednesday
Good news for Independent Retailer: Speedway has finally made their move, $3.399 in Michigan.
So, that would be a 100% CORRECT prediction for Ed!
I saw prices of $3.399 as early as 10:00 (Waterford) and 10:14 (Lansing), but that price was the high end of where we already were in Kalamazoo and Grand Rapids, so I waited until I saw fresh reports from 7 different cities, including Allegan, before I was ready to call it a statewide increase. That particular station in Lansing had been $2.999, so a 40¢ increase for them while only maximum 12¢ increase in the immediate Kalamazoo/Portage area.
Just before I concluded an increase was underway, I compiled this list:
Ohio (3rd), Kentucky (9th), and Indiana (10th) are now among the 10 lowest state averages in the nation. Michigan ranks 19th. Among the 20 lowest metro areas in the nation:
7. Toledo – $3.088
8. Dayton – $3.093
9. Columbus – $3.094
14. Akron – $3.118
20. Cincinnati – $3.142
Based on yesterday’s Chicago spot market price ($2.5571), the current Michigan spike line price is $3.303766, meaning today’s Speedway increase was lower than normal, 9.5234¢. I assume it is lower than the normal 20¢ because Speedway expects the wholesale cost to keep going down and/or they still have large inventories. Only a 10¢ increase isn’t unusual. Speedway commonly does it when prices get really high ($4) and they don’t want to scare people away from their C-stores.
Ohio prices should soon move closer to $3.299. That’s the price Speedway is rolling out right now. Paid $2.98 earlier this morning.
2:28 p.m. Wednesday
Here are the first reported Michigan Meijer locations to respond at $3.399:
1:05 Royal Oak
1:57 Roseville
2:00 Fort Gratiot
2:08 Holland
2:11 Grand Rapids (original Thrifty Acres location)
2:19 Grand Ledge
2:20 Charlotte
Meijer sent a text alert about 11:43 a.m., but nothing on Twitter.
8:55 a.m. Friday
We could go up to $3.499-$3.599 in Michigan on Monday (if not today).
This would follow the following market increases on Thursday:
* Chicago spot – up 8.18¢ (3.141%) to $2.686
* New York November gasoline – up 11.68¢ to $2.686 (yes, the same as Chicago) – down 1.05¢ this morning
* New York November oil – up $2.91 to $82.59 – up another 67¢ this morning
There are 3 reports of independent stations in the Kalamazoo area that have gone up this morning:
– 7:23 a.m. $3.579 at the Doughtery’s Corner Marathon on W. Main St. in Oshtemo Township
– 7:56 a.m. $3.499 at Marathon and Shell in Otsego
No stations in the Grand Rapids area are reported above $3.399 this morning.
Someone mistakenly reported a price of $2.339 yesterday for the Speedway in Parchment (I assume $3.339 was the correct price). I’m pleased the idiot at the Kalamazoo Gazette did not report that price (it was probably corrected before he had the chance to see it): http://www.mlive.com/news/kalamazoo/index.ssf/2011/10/motorists_suffer_a_10-cent_hik.html
1:30 p.m. Sunday
Two Grand Rapids area stations are reported above $3.399 today:
7:22 a.m. $3.559 Thunder Mountain, Plainfield Ave. & Coit Ave., Grand Rapids
12:28 p.m. $3.499 BP, 28th St. & Wilson Ave, Grandville
No Kalamazoo area stations are reported above $3.399. The low end of gas prices in Kalamazoo/Plainwell/Paw Paw has increased from $3.239 in Plainwell/Otsego to $3.319 around Westnedge near I-94. The Dougherty’s Corners Marathon that was reported at $3.579 Friday morning is now reported at $3.379.
The Chicago spot market finished Friday at $2.653. That puts the current Michigan spike line at $3.40542. That means we could get an increase to $3.499-$3.599 on Monday, unless Speedway’s inventories are still high.
New York November gasoline futures settled down 3.84¢ to $2.6476 on Friday.
10:30 a.m. Monday
Speedway is staying put today (at least this morning).
New York November gasoline futures are currently up 6.58¢ to $2.7134. Futures are up 22.5¢ since $2.4884 on Tuesday.
New York November WTI oil futures are currently up $2.81 to $85.79. Oil futures are up $10.12 since $75.67 on Tuesday.
The lowest reported price in the Kalamazoo area is $3.299 at the Shell and BP downtown. All other stations remain $3.399 or below, except the credit price of $3.409 at the RoadHawk on Stadium Dr.
In Grand Rapids, 3 stations are reported above $3.399, and all are fresh reports:
* 9:25 a.m. $3.459 at Sam’s Club on 28th St. in Kentwood
* 9:46 a.m. $3.409 at Marathon on Burton St. at Kalamazoo Ave. in Grand Rapids
* 9:58 a.m. $3.559 at Thunder Mountain on Plainfield Ave. at Coit Ave. in Grand Rapids
The lowest reported price is $3.179 at Admiral and Family Fare in Sparta.
In the Lansing area, 5 stations are above $3.399 to as high as $3.599.
independent — yes, I would like to see that.
Is the spike line rack adjustment current? It seems to be the same differentials as last week.
Where do you get the data for the rack adjustment?
What is this data used for?: http://www.axxispetro.com/download/wisconsin-cta.txt
Apparently, there is a 4.5¢/gallon federal tax refund on E-10, which is the regular unleaded sold at pretty much every location except boat docks in Speedway states. Is this refund current? Is it relevant to your calculations?