Friday, February 21, 2025, 10 AM: I have been posting less often, because wholesale prices have been stable since, well, late August of last year. It is weird, but it has also kept prices closer to $3 than $4 in the Midwest. This week, it appears there was a mild price reset to $3.09 in west Michigan, although Marathon tried … again … to hike to $3.19.
In 2025 so far, it seems the retailers are accepting lower margins (profit per gallon sold) than they were during 2024. As readers know, the aggressiveness of 2024 has been on my mind for a while, so this morning I dove into my spreadsheets to look back as far as 2020 and study my calculations to estimate margin.
In the figure, I’ve divided the last five years into three periods. For 2020-21, the first year of the pandemic, we had classic Gas Game behavior, with margins topping out at about 30 cents per gallon after each price hike. In 2022 through about a year ago, margins varied wildly, driven in part by the Ukraine war (which started where I have drawn the yellow arrow) and high inflation. (It is still a question of how much of that inflation was caused by higher oil and gas prices.) Then, starting a year ago, hikes started occurring at the 30-cent mark, rather than hikes landing at that mark.
The red arrow marks Election Day, and it appears to me that aggressive pricing subsided after the election. Or, there is some sort of winter break right now, and pricing behavior is going to start being driver-unfriendly again next month, which is what happened a year ago.
Short-term, once again, I have no prediction to make. If the 2024 switch is turned back on, we could easily see $3.39. If not, prices will drop below $3 again. We’ll see. -EA
Really good post. Enjoyed seeing your graph!?
$3.15 popping up in Fort Wayne area. That would be a .30 to .48 jump, depending on which side of town you were on.