Sunday, October 13, 2024, 7 PM: Let’s talk about what happened last week. On Wednesday the 9th, we continued to be in this situation: a wide range of retail prices, oil ticking up (and bouncing around), and months of aggressive pricing to the upside in Michigan. That was a recipe for a price reset, and on Wednesday evening, Marathon made its move, posting $3.59 at several stations in Kent County. This was 20-40 cents higher than their competitors. Next step, naturally, is that other retailers would follow suit so that by Thursday afternoon, it would be $3.59 throughout Michigan. In fact, for the Speedway station I watched in Fort Wayne, they went from $2.91 on Wednesday to $3.39 on Thursday.

In Michigan, that didn’t happen. (Hooray!) Instead, other retailers that I observed continued the typical drop of a few cents, and today you can find gas under or close to $3 at many stations in Kent County and points east. (I saw this while driving to East Lansing on Saturday.)

So, what happened this time? Did the usual fall lull in gas prices finally find its way to Michigan? Maybe. I am beginning to see that the problem has been at the wholesale level, rather than the retail level. Maybe this strike at a key refinery in Detroit has something to do with it.

What’s next? I predict they’ll try again this week to do a state-wide reset. Hey, Big M, maybe this team be less aggressive (like, you know, $3.29-$3.39), and I’d bet the other retailers will fall into line. -EA

Comment on the October 1 prediction: Imagine my shock that, despite a jump in oil prices after last week’s violence in the Middle East, the first time wholesale prices appeared to move at all was Thursday afternoon. So, the prediction was quite WRONG.

Sunday, October 6, 2024, 8 AM: Gas prices in Michigan remain a puzzle, compared to nearly everywhere else west of the Rocky Mountains. As you can see on this map, Michigan and Illinois are the two states with notably higher prices. In Illinois’ case, they have the second highest gas tax in the country (almost equal to California) and gas prices in cities like Chicago tend to be higher for a number of reasons. While Michigan’s gas tax is in the top 10 in the country, Indiana’s is higher and Ohio is 15th, yet their average prices are notably lower than Michigan’s.

Wholesale prices are around $3, and you can find gas for that price in Michigan today (for example, north of Grand Rapids). At the same time, the average price in Michigan is $3.34, and there are some $3.40’s still in Kent County, after that hike to inconsistent hike to $3.55 on September 25. A wide range of retail prices plus upward pressure on wholesale prices is historically a recipe for a price reset, so find some cheaper gas and fill up today if you can.

I will continue to explore this Michigan gas price puzzle. -EA

Comment on the September 22 prediction: I resisted making a prediction. Prices did rise in Michigan, to $3.55, but it was not a consistent hike.

Tuesday, October 1, 2024, 4 PM: I spent the weekend at MSU, with no time for writing an update. During the weekend, I spotted $3.19’s along I-96 near the interchange with I-69. Those are two truck stops that compete hard with each other, and I suspect that they did not embrace the $3.55 hike.

But here we are this afternoon with new violence in the Middle East, leading to oil jumping more than 2%, back above $70. Of course, wholesale gas prices will follow quickly, and they will probably pass that along to consumers, maybe as soon as tomorrow. Combine that with the lack of enthusiasm for last week’s silly hike, and I think we are talking at least $3.59. I will fill up first thing tomorrow, just in case. -EA

Comment on the September 15 prediction: Oh, look, a fresh hike on September 17 in Michigan, to $3.49. My prediction was WRONG.

Sunday, September 22, 2024, 4 PM: We have seen a mild move upward in wholesale prices the past two weeks, and here in Michigan, our retail friends took advantage to put in another hike, to $3.49, moving from high margins to higher margins. This time, though, some competitors decided not to follow the leaders, and in fact you can get gas for $2.97 in Rockford this afternoon, and $3.29 all over the place.

What are we going to do, Gas Game friends, with this ongoing aggressive pricing to the upside here in Michigan? Here’s an example: The average gas price in Michigan this afternoon ($3.37) is 27 cents more than the average in Ohio ($3.10), despite a difference in state gas tax of only 10 cents. With the aggression factor we’ve been seeing in the data in Michigan for months, if there was a fresh hike, we would be looking at $3.59 – $3.69 here. Arrgh, I just can’t make that prediction, but let’s be vigilant for a possible hike this week! -EA

Comments on the lack of prediction on September 2: While enjoying lower prices during the week of Labor Day, we got a surprise hike to $3.39 in Michigan last Monday.

Sunday, September 15, 2024, 2 PM: The good news is that oil is down 10% over the past few weeks and that has put downward pressure on wholesale gas prices. The annual end-of-the-summer blend has helped, too. The bad news is that whatever methodology the retailers are using this year spit out a hike last Monday, and our Gas Buddy had the appropriate response.

So, to play the Gas Game, we remain in a struggle to adapt to the current paradigm. Looking at my pricing records since May, it is as if my calculations are off by 40 cents. For instance, a week ago, my margin calculation was a healthy 46 cents, and then with the hike, it landed at 71 cents. In years past, we could wait for a 0-10 cent margin to see a 25-40 cent hike.

Well, even with an unprecented 40-cent fudge factor, I don’t predict a fresh hike this week. Go find $2.99 where you can, drivers! -EA

Comment on the August 25 prediction: Despite an alert last Tuesday that prices were rising to $3.59 in Michigan, I did not see anything of the sort on the west side of Michigan, so I am going to score the prediction as CORRECT.

Monday, September 2, 2024, 4 PM: Well, this is nice, driving around west Michigan and seeing prices getting closer and closer to $2.99. We are in the sweet spot at the moment with (1) the annual “end-of-summer clearance sale” on the summer gas blend, (2) oil prices down 10% in the past two weeks, and (3) the federal government taking a hard, public look at algorithmic collusion in another industry. How will this week play out? That’s a tougher call, as margins for the retailers are getting closer to the point where they often reset prices. But, my early September predictions of price hikes usually don’t pan out. (For example, last year the first hike in September was on the 28th and we were dealing with similar conditions today.) So, I am going to stick with no prediction today and invite drivers to enjoy lower prices while they can. Maybe we’ll see some $2.99’s in Kent County! I know you can find them today in Grand Haven. -EA