We see what you did

Comment on the January 15 prediction: On Tuesday, most other west Michigan stations followed the stealth hike to $3.09, so I was WRONG.

Sunday, January 21, 2023, 3:00PM: Go Lions! So, on Tuesday the 9th, there was a wholesale spike in the Midwest, adding more than 20 cents a gallon across the board, even though oil prices held steady. This hike was connected to the storm that came through a few days later, dumping a lot of snow and bringing below-zero temperatures. I thought we’d get an adjustment down after the storm was done — this is the way it usually works with hurricanes in the South, but wholesale prices have remained stubbornly high, so now we are dealing with typical prices over a few percentage points over $3. What’s next? The stations that did not participate in the hike, and there are a few, have gas as low as $2.62 today, and that is consistent with the floor we have calculated.

What a range right now, and looking back over my 2023 data, it seems that the retailers were somewhat successful sneaking in a margin boost when we were enjoying that significant drop in prices in August-September. To be more precise, hikes have been coming with retail prices near a 20-cent margin, rather than a 0-cent margin, utilizing my formulas. Part of it may be that the “middleman” estimate I use for transportation and storage needs to be adjusted upwards. If competition could push back against this new dynamic, I would say we have quite a way to fall, back to the low $2.60’s. Otherwise, it is more like the low $2.80’s.

Given all the stations over $3 still, the chance of a fresh hike this week seems low. Best strategy for drivers in Kent County is to find their way to Grandville, where there seems to be the most competition right now. -EA

Updated: January 21, 2024 — 2:46 pm

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