In a word, yes. In recent posts I have told you that the Exxon refinery in Joliet was down for repairs. Turns out it was due to a compressor problem. (http://www.nasdaq.com/article/refinery-status-exxon-has-compressor-problem-at-joliet-refinery—filing-20130325-00606) Well, it’s back up! (http://www.bloomberg.com/news/2013-06-10/chicago-gasoline-falls-to-1-week-low-on-exxon-joliet.html) This, along with some supply coming in from the Gulf region sent the Chicago spot price spiraling down almost 20 cents today.
The news I have read says this should only be the beginning. BP’s Whiting, Indiana refinery expansion project should also be back up and running by the end of the month. (http://www.hydrocarbonprocessing.com/Article/3216650/Latest-News/BP-nears-completion-of-work-to-modernize-Whiting-refinery-in-Indiana.html) Right now we are at a 40 cent premium to the NYMEX RBOB. That has in the past when times were good been a 20 cent discount. We still have a long way to go, but it looks like we are out of the woods for now.
and I heard this from the movie ‘2012’ when they say everything is okay…..it is then when things starts to go wrong!
Gosh I sure hope relief is on the way. Fortunately I’ve been away on business over the last 2 weeks using a rental car, so the gas in both my vehicles prior to leaving cost me in the low $3.70 a gallon range….the good old days! I’m heading away on an overseas vacation in a few days and when I return home in early July I’m hoping for some cheaper gas
It will come down, I guarantee it. I guarantee it will come down to $3.89-$3.99 range and we should be happy that its not $4.29.
Sorry to be cautious on this one. Channel 8 in Grand Rapids did a news story on the noon broadcast about prices going down. The last time that happened, gas prices went up.
I hope I’m wrong.
I agree, Jim, every single time, with out fail, whenever a news organization has a feature from a pundit that predicts prices falling, every single time, the prices go up. As if the market is working to make liars out of the pundits. I am hoping to break that cycle this time.
Just saw this article on TV13’s website!
http://www.wzzm13.com/news/article/258918/14/Attorney-General-Sends-Warning-to-Gas-Retailers
Sam –
Price fixing, eh? How about how every single speedway goes up to the same price, at the same time, but then they come down to lower prices at different times and days at different stations? Keeping busier locations at a higher price maybe? I bet that won’t be investigated.
Hello Guys,
It seems that reaction has started from AG! I don’t know how much my letter contributed but it did get counted and so does from many who bothered to write that initiate the decision. Sam has already posted a link from WZZM 13 and here is another link from WOOD TV 8. http://www.woodtv.com/dpp/news/michigan/attorney-general-warns-of-gas-gouging
I think this should encourage us all to ‘speak up’
Thanks
Unfortunately, its just kabuki from our Michigan AG & the other reps who are complaining about lost tourism dollars ( not to mention movie production…regional fuel costs definitely factor in to studio location shoot decisions) They’re warning the littlest fish in the food chain- the retailers- as opposed to the suppliers and worst of all, the speculators, who keep flirting with the same cliff they nearly drove us off back in 2008. The AG is likely just as paid off as any of the other top dogs in Lansing, where the current administration never met a big business lobbyist they didn’t like.
Sorry to be a cynic, but the next spike is prolly thurs. will be happy to be wrong, won’t be surprised to be right.
Chicago Spot is dropping like a rock, but prices sure aren’t. It went down another couple pennies overnight to $4.09. Muncie still has several stations hovering around $4.20. Meanwhile, drive just 40 minutes south and Indianapolis has stations already down to $3.84.
Looks like they’re trying to squeeze every last cent out of us.
I know, Chris. There are two things you hear that just don’t resolve within each other. When prices rise, you hear…… 1)We have to raise our prices on current inventory to be able to afford the replacement inventory. When prices are falling, you hear 2)We have to run out the expensive gas at higher prices to get out what we paid for it. Those two statements don’t wash as a whole. Either you pay for what you fill it with, or you pay for what is in the tanks. If you pay for it both ways, that’s double dipping the customer wallet. I have read in many places that if price gouging is to take place anywhere, it is during the falling of prices. Because the consumer can be calmed by slowly falling prices, when the cost has fallen like a rock. We customarily see 30 to 45 cent price hikes in a 2 hour period. Think we’ll ever see a 30 to 45 cent drop in a week? Even when the wholesale price drops by 60 cents in that week? Falling price periods is when it is easiest to mask and take profit.
The thing is if a retailer does get caught, they only get a slap on the wrist with a fine. It should be more than just the fine. How about a punishment for stealing peoples hard earned money? Some people have to choose between gas or food and thats just wrong to have to think about.
Hey, here’s a thought. Storms coming through the area this evening into tomorrow morning. One to four inches of rain, 45 to 70 mph winds (higher in some places). Just remembering how rain shut down a refinery a month or so back.
http://www.foxnews.com/weather/2013/06/11/derecho-risk-from-chicago-to-columbus/
I don’t know why I bother doing this, other than showing you guys my story. The weekend that Greedway went to 4.15, I only went to 4.09. To me the cost on that Friday did not justify going that high. My cost was 3.94. On Monday my cost was 4.11. Maybe Greedway knew something I didn’t? I had to buy gas on Monday so I went up to 4.15. That is 4 cent profit (not factoring in credit cards). I Tuesday I went to 4.29 with Greedway. Another load on Friday the 7th. My cost 4.21. Another load on Monday the 10th, my cost 4.26. Cost dropped 13 cents on Tuesday and 27 cents today. As of this morning I still had over 2 thousand gallons in the ground from Monday. Had to drop to 4.19 to compete, losing 6 cents a gallon.
That being said the AG is looking at the wrong end of the pipeline.
On a gallon of gas the feds get 19 cents, the state about 44 cents based on 4.29 gas. That’s more than I ever get. And the state makes more as the price goes up, I don’t.
Some of you will say “well you make it up on your overpriced items in the store”. Well when gas is this high people don’t buy stuff inside!!!
So if you guys all think station owners are getting rich (speaking of independents only). I have advice for you, spend a million dollars to build a business and join us “rich people”!!
Rant over
Independent: I don’t think most of us here have a problem with retailers making their living, we are much better off with you guys in business than not in business. I worked for an independent retailer selling major appliances in the early 1970’s, and the owner was emphatic that it was NOT what you could sell something for but rather what you could buy it for. And the preponderance of us would simply be happy with some rationality to the 45 cent hikes and single sent drops. States outside our area don’t seem to be subjected to it, why us? (Yes I know Speedway, etc, etc…..but why?). And especially with Bloomberg wanting $$$$$$$ for those that want to see the wholesale price of gasoline, everything now shows up at the pump, from some magical (dark wizardry) in between. We are venting our frustration at loosing an extra $35 or more a week than what we “should” be losing. What is the rationale, the reason that we should spend an extra $4.50 to $9.00 because we filled up after work rather than on our way in to work? It should be only $1 to $2.00 more, like in the other 46 states. The pump is were we see it and pay it. I agree, the AG should be looking into why a squirrel, 2″ of rain, or why 3 refineries have to make changes all in the same month in the MW? Why any issues in the Gulf, in the Atlantic, or in the Pacific send our prices up besides issues in the Mid West. We take it on the chin (wallet) every single time. EVERY SINGLE TIME, and none of us, none, make the $$ that people in CA, NY make.
My Rant is over.
Perhaps Independent Retailer can educate me a bit on this subject. Are all Speedway stations company owned? What about the other companies? Are the stations similar to franchises like McDonalds and other fast food joints or are you truly independent?
I’ve been in the aviation business for thirty years and know that if we couldn’t mark up our parts sales a certain amount we would lose money on the sale. Appears to me you’re at the mercy of the brand you’re selling and they dictate your wholesale cost. In turn, they also hove to mark up their price. That leaves everyone at the mercy of the traders and speculators who are the ones making the (obscene) profits.
Pleasepost some information on the subject.
Timmp and Norm I’m sure you know speedway is owned by marathon. Big oil big lobbying dollars I’m guessing. I have spent 15 years trying to figure out speedway’s plan.
Norm I am truly independent, we make pizza and subs in house. That is our profit center. I buy my gas from a “jobber” who owns 20 stations of there own. I lose money on most of my gas sales. It is a draw to bring people in. Have spent the last couple of years trying to figure out if it worth it. It is hard to play the game with the big guys.
P.S. Timmp I have to buy gas too. 🙂
If enough independent retailers decided to pursue legal action against the rigged suppliers and refiners, maybe we would be a wee bit better for it… Independents could decide NOT to follow the price changes… I understand they’re not Costcos or Walmarts but still, there has to be a way to NOT play the game, do not raise up to Greedway, and still make a living.
Lemme ask you this. Let’s say you buy from your jobber at 4.00 and sell at 4.15 with Greedway when they spike. If you leave it at 4.05 or so you don’t lose, and probably will sell more than usual and run out. What happens on your next load? will the jobber or the overlords ‘punish’ you? In other words, when they spike and you can afford to, spike a LOT later or spike LESS.
Is there a hole in my strategy? And, have independents pursued legal action towards any of the price fixers?
Could it be that getting rid of independent retailers is part of the Greedway spike strategy?
an unrelated though relevant story: airlines (whenever they started!) offered services between two cities and promised the quickly reaching to the destination and everyone bought the tickets. this scenario looked great until somebody actually went to airport and took the flight from point A to B. upon arriving the airport the person had to check-in almost 2 hrs before the actual flight time, after check-in and doing the security clearance when he arrived at the gate, he learned that the flight is delayed by 2 hrs and then by another 1hr (so total 3 hrs) upon inquiring the gate agent says that ‘some unknown technical issue,’ and that bought them 3 hrs. finally the plane flew by the time it should be actually making a returning flight from the destination. just before the boarding was to start, the gate agent started to shout that he is looking for volunteer who would prefer to go tomorrow instead of today as the flight ‘overbooked’ and the volunteer will get $300 travel voucher (earlier to 2008 one use to get up to $1000 in cash, hotel stay, food and a shopping voucher at the duty free shop!). if no one shows up then the last minute reservations are automatically cancelled if there are no standbys (earlier to 2008, they will bring in a larger plane as 3 hrs delay give enough time to accommodate all, if not the $1000+ goodies! or they are accommodated in other flight by other carrier to the same destination) no transferring to another airline (when the airline advertise they say that they are the member of star alliance, one of biggest alliance of airlines and thus, a passenger is never late! when you wait 3 hrs and are offered that travel voucher you realize the value in those words! finally you reach your destination in almost 5-6 hrs which you would have reached in almost the same time had you driven your own car (without check-in, security tickles and annoying delays & travel vouchers and hefty airticket prices!).
now compare that to gas prices, the gas retailer in this analogy is nothing more than the gate agent shouting for the volunteer, if the company pulls away the $300 travel voucher despite that he will still have to shout for the volunteer willing to forgo their confirmed ticket, and tomorrow they may get rid of gate agents altogether and offer the gas from fully automated stations and the price much higher on the name of security that they have to situate on this automated stations! now you figure out the rest of the analogies in this story!
Ocho, You’re not a cynic. The refineries have taken a play from the ENRON play book. Create tight markets by planned maintenance and planned upgrades. So that when any type of problem arises, such as flooding, they’ve created a short supply. Spike time! I don’t know if you’re old enough to remember Enron. But, I agree that The AG or anyone else with the authority to investigate will find any wrong-doing, since they really don’t give a rats patootie, these people have donated to their campaigns.
Momgam has hit the nail on the head with this one, although this may need to focus on the investors/traders in the market. Research what was done by Enron and it’s traders with the deregulated energy markets in Cali. I would even venture to say that even the same traders are involved.
@independent retailer
I think everyone on this board knows it is not the station, especially the independents, but the refineries and big oil co’s manipulating the prices. When you see gas stations close up shop and go out of business, but record gas/oil profits, you know where all the cash is going.
Your right, it might not be worth it. If your in, then you maybe you can make it work, but anyone thinking to jump into (the back end of the gas station ponzi) will have a tough time.
The people who are foolish enough to pay for the overpriced goods in the store are finally realizing that they could never afford it in the first place. Thus, all your profit margin to pay rent, utilities, and wages is dwindling away.
I don’t know how long you have been at it, but I would guess pre-2008 the profits margins were probably split pretty even between the station, wholesaler, and oil co. Once the oil co.’s saw how high the price could go and what is the bare minimum amount of gas people need to get to work they devised a plan on how high they could push their fees and squeeze the profits from the rest.
Good luck
This just in !
Citgo Petroleum Corp.’s Lemont, Illinois, refinery lost power to production units after a lightning strike yesterday. Pump prices in the Chicago area were $4.399 a gallon, 76.7 cents a gallon above the national average, according to data from AAA, the largest U.S. motoring organization.
http://www.bloomberg.com/news/2013-06-13/gasoline-gains-on-retail-sales-rise-midwest-refinery-outage.html
This will put a end to that dreaded price slide ! Suit up, strap in $5 or maybe $6 here we come !
Yahoo !
What I can’t figure out is how Chicago Spot is down 70 cents of its high of $3.61, but gas stations near me in Indiana are STILL holding onto $4.09 as their price….only a 10 cent drop off the high. Muncie stations still have several at $4.19 and are only 6 cents off their high.
Gas has never plunged (I think a 10 cent drop in one day is the largest) , but this is the slowest drop in prices I think I’ve ever seen when spot prices have tanked. Something is verrrrrry fishy
http://energytomorrow.org/blog/us-oil-growth-energy-security-and-global-impact/#/type/all
Dear Ed and Pat, please remove the captcha from posting here. its annoying to be able to figure out those noodles on a smartphone screen!
Oil is up over $97 a barrel today . . . spike??
That would be consistent with my theory that right when we will start seeing relief from ‘refinery’ issues we’ll have some reason or another of ‘crude’ and be back at $4.00 or so.