Comment on the May 7 prediction: Oil did not “turn around a bit” the past week. In fact, it closed lower at $70. So, no reset to $3.39, and technically, the prediction was CORRECT.
Sunday, May 14, 2023, 3:00PM: Let’s start today with diesel prices, as I’ve noticed retail prices dropping below $4 in west Michigan, the lowest since February 2022, when the Ukraine war started. Today I learned that diesel is named after its inventor, German engineer Rudolf Diesel. Diesel fuel, which is less refined than gasoline, is thicker. Retailers are a lot less interested in playing a “Diesel Game” with prices, and diesel prices tend to be a better proxy for overall energy prices than volatile gasoline prices.
During the Ukraine war, diesel prices climbed from about $4 a gallon up to $5.99 last June, when gas prices were also over $5. Because trucks typically have diesel engines, some of the inflation that we have seen in the past two years is paying for higher costs to transport stuff people buy, like food.
For oil, diesel, and gas prices, it can be said that the market has finally adjusted to the disruptions of the war, or that the market is signaling that end of the war is near. Either way, that is good for us.
Not so good for Michigan is that prices rose the other day in Indiana, and from the heat map, it looks like also in Ohio and Illinois. But in other states west of the Rockies, prices are muted, reflecting that $70 a barrel oil price. It looks like the 0-cent margin price in Michigan is $3.19, so anything cheaper (hello again Hudsonville and Jenison) is a bargain right now. I suspect they’ll take a shot at a reset to $3.39 or $3.49 on Monday or Tuesday. -EA