Lame Price Hike Fizzles Out

Sunday, December 11, 2011, 3:30PM: In my last post, I noted the following: “It appears that Speedway is trying to improve their margins. They have not been successful in the past trying to do this.” That appears to be the case again. First, for more than a decade, every attempt to push margins higher has been stopped by the competition who start lowering prices very soon after the price hike in order to bring people in to buy more pop and chips. Second, the hike occurred after a wholesale jump of 13 cents in a week, and then, of course, wholesale prices dropped at least a dime right after they raised retail prices. The upshot is that at the moment, my calculation is that prices need to get down to $3.15 or so before another price hike happens. This can change on Monday, of course, after the markets open and wholesale prices change, but if you are wondering how we went from $3.45 on Tuesday to $3.19 in Kentwood this afternoon, I’ve given you two reasons. No prediction right now about what happens this coming week.

10 Comments

Diether Haenicke

December 15, 2011 at 10:41 am

Thursday, December 15, 2011

Because Speedway doesn’t normally raise their prices on Fridays, it looks like we are on course for the next reset to occur on Monday, December 19. So, consider filling up for your holiday travel before 9:30 a.m. ET Monday.
David

December 16, 2011 at 9:40 am

Question. Why would a reset bring prices back up when it seems that oil prices are falling? I don’t really understand the big “game” as the only game I understand is to screw the end user (us).
Ed Aboufadel

December 17, 2011 at 7:32 am

@David — if you look at our page on the math behind this:

http://www.thegasgame.com/mathstatsdata/eds-calculations-for-expected-retail-price/

you can see the connection between wholesale gas prices and retail gas prices. The relationship between oil prices and gas prices is very complicated, and I don’t have a formula for that.
David

December 17, 2011 at 10:08 am

Thanks Ed. It just always seems to me that when prices go up in the future market, prices at the pump follow but the inverse never seems to be true. You wrote an article in September (News Flash: Gas Prices Are Too High!) that pretty much summed it up how the relationship between oil and gas prices from a few years back don’t seem to relate to how things are now. I have no clue on how all this stuff works out, I just know I am on The Gas Game daily, trying to save a few dollars a week on gas before Greedway makes a few more.

I appreciate everything that Diether, Bill and yourself put into this site. I hope all you have a Merry Christmas, don’t have to do anything with this site for no spikes during the holidays, and a Happy New Year!
Diether Haenicke

December 18, 2011 at 1:13 pm

Sunday

There is now about a 14¢ margin (Michigan statewide average $3.199), so there should not be an increase tomorrow (Monday). Normally, Speedway would raise their prices well in advance of a major holiday weekend, like on Tuesday. I don’t know if we’ll see that week or not. Check back Monday evening.

We could very well see some 5-7¢ drops on Monday, followed by a holiday reset on Tuesday. The Monday drops will probably happen, but I don’t know about the Tuesday reset yet.
rick

December 18, 2011 at 9:11 pm

Something must be happening tommorow or tuesday speedway 36th and burlingame their guinea pig station (always one of the first to raise prices) is the lowest price ($3.05) in town????
Ed Aboufadel

December 19, 2011 at 7:45 am

Thanks, David.

Rick, wholesale prices dropped like a rock last week. I am planning on a new post today.
Diether Haenicke

December 19, 2011 at 1:45 pm

The first update of the day in the Chicago spot is up 1.85¢ (0.777%) to $2.4005.

Using last week’s rack adjustment, this puts the Michigan spike line currently at $3.07667. The Michigan average is currently $3.187. That is an 11.033¢ margin, not yet small enough to suggest a reset tomorrow, except for the fact we are heading into a major holiday weekend that has the Monday following as a legal holiday, “Christmas Observed.” (When I said yesterday about 5-7¢ drops today, I meant at individual stations, not the statewide average).

It is safe to say that you should consider filling up now at any station selling for $3.099 or less. In the Kalamazoo/Parchment/Richland area, there are 10 stations currently reported at $3.069-$3.099 (metro average $3.154). In the Grand Rapids area, there are 10 stations currently reported at $3.049-$3.079, with 7 of the stations in Wyoming. 11 of the 15 lowest Grand Rapids prices are located on 28th St. or Division Ave. The Grand Rapids metro average is currently $3.151.

There are 11 stations in Michigan reported at $2.929 to $2.969, plus a Sam’s Club in Ypsilanti with the state’s lowest price at $2.849. These lowest prices are found in Ypsilanti, Saginaw, St. Johns, and Owosso. The BP next to Detroit Metro Airport is the state’s highest reported by 10¢, at $3.599.

New York January gasoline futures are currently up 1.96¢ to $2.5066.

The large drop in the wholesale price last week followed the EIA report that gasoline inventories were up by a large amount.
cc102bob

December 19, 2011 at 3:37 pm

Hi – just a bit off topic here, but I discovered that the RSS feed for this site is not working properly. The last post at http://feeds.feedburner.com/TheGasGame is from November 17. I’m not sure if it’s something you control or if it’s a glitch somewhere else, but I figured it can’t hurt so mention it.

Keep up the good work!
Ed Aboufadel

December 19, 2011 at 5:03 pm

cc102bob — I’ll see what we can do about it.

Ed