Comment on the July 24 prediction: CORRECT, as prices continued to plummet.
Sunday, July 31, 2022, 2PM: For gas prices, this has been a remarkable, historic year. We started 2022 with gas at about $3 a gallon, watched it climb to over $4 by early March, due to the Russia-Ukraine war, then it backed off, and then that crazy, unprecedented early June series of 20 cent hikes, to over $5 a gallon. Since June 6, it has been nearly two months of prices dropping one or more cents per day, and now we are getting close to $4 a gallon again at a typical station. As I’ve written previously, I think the June hikes had something to do with some trading shenanigans, while the behavior since June 6 has actually been much more typical, when the gap between retail and wholesale prices is large.
It is time to ask ourselves when to expect our 7-11 friends and others to look at the range of retail prices right now, and the wholesale price, and hit the button for a system-wide reset. I guess the answer is, “Not until we have to”, because why not keep retail prices higher if they can? The only things that brings prices down is competition and a lack of customers. So, to those station managers that continue to look to undercut the competition in their neighborhood, even by a penny at a time, thank you. Keep it up. As to “lack of customers”, despite all the recession talk, west Michigan roads are full of traffic, and I haven’t seen that slow down yet.
Prediction time: wholesale prices right now suggest that filling up their own tanks with fresh gas may be costing retailers something like $3.59, so that’s our floor right now. I am still seeing way too many $4.39’s and higher, so I would be shocked if there was a price hike this week. If they are a bit OCD at headquarters about prices, I could see a system-wide reset, but it would be something like $3.99. That would be OK. -EA
I’m beginning to wonder if 7-11 Speedway is trying to take the lead in permanently increasing desired margins as prices fall. I’m seeing them lag way behind nearby competition with no hurry to lower prices. In the extreme one near me is at $4.69 today while a nearby Thorntons has dropped to $4.19 from $4.29 for the last several days. This Speedway has consistently been 30-60c higher than the Thorntons for the last 6 weeks since prices started falling from their peak. Another near me is also 20c or so above Delta Sonic just a block away. If higher margins result in higher net profits as in not driving away customers who might also buy inside stuff it will be a win for 7-11 and others will likely follow. I guess once (if ever) rack prices level out for a while, we’ll see what Speedway’s reset margin is eventiually.
Currently paying less than $4 on a road trip. Easy to do with Gasbuddy and planning ahead. South Bend Indiana was $3.99 Sunday then $3.99 in Pentwater Michigan Saturday and another fill in Pentwater tonight. Might get a $3.89 fill tomorrow in South Bend. Put off travel until it went down under 4 bucks.
Spot’s in the $2.60s. We could realistically be in the $3.40s in Ohio right now…..
We could realistically be in the $3.60s in Michigan right now but, still way too many stations selling over 4 bucks. North of GR we’re sitting right around 4 dollars on average, at least quite a few $3.99s or lower.
Freight costs are up significantly this year, especially with the higher diesel prices. 3.70’s already in Northern Michigan but under 3.60’s probably doesn’t allow enough for freight. Independents seem to be leading the charge downward.
Topped off in Layfayette Indiana for $3.55 last night. Finally getting numbers that make sense in a few areas.
$4.29 increase in NW Indiana led by Family Express.
Absolutely no reason for a spike. Margins were way fatter than normal to begin with.
Rack prices in Chicagoland up 30c in 8 days. Lowest prices are in my area where a bunch are under $4 losing money and Costco/Sam’s selling for $3.85 at a big loss (we know they don’t much care). Speedway has an over $1 range at their stations and many are still unusually profitable.