Comment on the May 30 prediction: The title of the post, “Going Into June, No Relief in Sight” was certainly CORRECT, as we saw two price hikes the past week, ending at $4.99 here in Michigan. But, I also wrote, “most likely prices don’t move much this week”, which was painfully WRONG.
Sunday, June 5, 2022, 5PM: First, let’s go back and see where we have been the past four months. In early February, oil was trading at $90 a barrel, and gas prices in Michigan were hovering around $3.39. Then Russia invaded Ukraine, oil moved to the $100 to $110 range, and gas prices soared to $4.25 by March 7, but then backed off to the $3.70’s in late April. The current surge to $4.99 really got started on April 25, when we had that Sunday hike to $4.09 in town. From there, it was $4.39 on May 2, $4.59 on May 16, $4.79 on May 31, and then $4.99 on June 2. Meanwhile, oil has moved up to the $110-$120 range. You can see all this on a chart published by the Detroit News.
Although Ukraine and other factors have had an effect on oil prices, those reasons don’t explain the more than 25% spike in gas prices since late April. From my on-going work, it does appear that these jumps are happening at the wholesale level, rather than an increase in retail margins. In other words, the retailers are just passing on their cost to buy gasoline to you, rather than gouging for extra profits.
So, that means, as our GasBuddy observes, we probably have a supply problem right now — the refiners aren’t making enough gasoline to keep up with demand. And we’ll have to explore that in a future post.
In terms of playing the Gas Game, this current surge is unprecedented, and it has to stop soon. But there was no market information at the end of the week to suggest what to expect this coming week. We just have to keep an eye on proxies for wholesale prices, such as NYMEX. No prediction today, though. -EA
Over here in northeast Illinois, with higher taxes and 45c higher wholesale, we are almost certain to see a hike tomorrow to $5.95 or $5.99 by Speedway. I know as part of the sale of Speedway to 7-11 Marathon has an agreement to sell the chain gas for several years. Maybe also be giving them a good deal, because Speedway has been slow to hike (considering what’s been happening at wholesale the last couple months)
$5.099 in Ohio today.
EPA indicates gasoline inventories are low on the East Coast with strong global demand for gasoline driving up short term prices.
https://www.eia.gov/outlooks/steo/marketreview/petproducts.php
$5.25 in Muncie Indiana
$6 bucks a gallon by the end of this month? The Indiana state average is up about 94 cents in the last 30 days with no end in sight
$5.89/5.99 in Chicagoland.
I think they may have spiked the prices in Toledo after the evening commute. We’re now at the usurious $5.099!
This WILL bring the economy to a screeching halt!
All we need is this ridiculous housing bubble to pop, and it’s 2008 all over again.
RBOB peaked at $4.32 Sunday night. It is now down to $4.11. Part of me thinks we’ve hit the peak. This is what was going to happen when we switched away from fuel efficient sedans. Now that we all had to have SUVs, trucks, and minivans, we’re paying the price. Ed is exactly right – it is a supply chain problem. Prices keep rising because people keep paying them – not just those who only commute to and from work, take the kids to daycare, or run to the store once a week. There is still lots of travel going on.
In SW Ohio BP led the spike but UDF seemed to lag which gave me a chance to fill up. Today UDF joined the fray at $5.099.
Hoping the worst is over, but also think the commodities traitors will not be able to help themselves and bid up the price for the 4th of July weekend.
RBOB back up to $4.17.
RBOB now above $4.26 this morning. Hoo! Boy!
$4.31 now. The pain definitely hasn’t peaked yet.