Tuesday, August 12, 2008, 3:45 PM: Didn’t get to check in last week as I was traveling and unable to connect to the Internet. Imagine my surprise, though, upon returning to GR to see that prices haven’t moved much. I got a media call at the end of July asking about this, and at the time, the move in retail did seem in line with the move in wholesale. However, with the price hike last week to $3.89, and with the slow, slow drops since then, we seem to be a price leader in the region, as prices are $3.62 in Fort Wayne, for example. Last year in late summer, NYMEX became a lousy predictor of retail prices, and the same is true this year. Using last summer’s and this summer’s data, I’ve tried this afternoon to cook up a short-term predictor based on a combination of the NYMEX and AXXIS prices. I have no reason to believe why this works right now, but taking 1.25*AXXIS-0.4*NYMEX seems to get us to the right wholesale price. Yes, that doesn’t make any sense. However, using today’s prices, we get a 0-cent margin price of about $3.67. With current prices in the $3.72 to $3.89 range, it is in that grey zone where we could get a price hike because some stations are near the 0-cent margin price, or we could pass, because other stations are still at $3.89. So, no prediction, but if you can buy gas for $3.72, then you should do so.
Tag: no prediction
NYMEX traders on another planet?
Comment on February 19 prediction: So, the day after a price hike, NYMEX prices jump 10 cents, so you’d think we’d get another hike. No, that would be WRONG.
Saturday, February 23, 2008, 6:45PM: Estimate of wholesale price using NYMEX: $2.60. Estimate using AXXIS: $2.45. That’s quite a difference! The past several weeks, $2.40 on AXXIS has corresponded to about $3.09 retail, so now we see why prices didn’t rise on Thursday. In fact, looking at the national map, it doesn’t look like the jumps on the future markets have shown up anywhere in the country. Going into this week, then, it isn’t clear if we’ve got a price hike coming or not, so no prediction.
Oil up, gas down?
Comment on 9/3 prediction:Â Prices hiked on Tuesday the 4th to $3.24, so the prediction was CORRECT, although a bit light on the price.
Wednesday, September 12, 6:00 PM: So, a barrel of oil hits $80 today, but wholesale gas prices don’t seem to be spiking. What’s going on? First, regarding oil, the Federal Reserve is getting pressured to lower a key interest rate next week, due to the problems with mortgages right now. Lower interest rates usually leads to a weaker dollar versus other currencies, so we get inflation, first in commodities like oil and gold. Gold has been going higher, too. So, it is weird — weak economic news leading to higher prices, but that might be a short-term effect. As far as gasoline, we have entered a period where prices tend to fall, from mid-September through late December, as demand drops off. Although there is news of refineries closing, wholesale gas prices have been moving lower. If the AXXIS prices are to be trusted at all, we are 20 cents lower than we were when we hiked to $3.24. That gives us an estimate for the price range to be $2.84-$3.04, and what do you know, you can get gas for $2.89 in Wyoming. Whether there will be a price re-set to above $3 on Thursday or Friday is a tricky question, since some stations are below $2.90 right now. So, no prediction, but be vigilant.
Price hike? Flip a coin.
Comment on last week’s prediction: I should have kept my 5/16 prediction. Prices fell a bit on Friday through Monday, with gas as “cheap” as $3.18 on East Beltline. So, my prediction was WRONG.
Monday, May 21, 2:00PM: No predictions to make right now. I am having the hardest time getting a handle on wholesale prices right now in Michgan. Clearly, we are completely out of whack with NYMEX, but the question is how much different are we? On the Gas Game website, a poster known as “retailer” says “today’s cost is $3.35”, which would explain why there were no further hikes since last Tuesday. On the other hand, $3.49 corresponded to a wholesale price before taxes of $2.70, and a site where I saw the $2.70 wholesale price said $2.86 last Thursday, and again $2.86 today. Go figure, right?
Memorial Day weekend is coming up. Last year, we had a hike the Wednesday before and the Tuesday after. In 2004 and 2005, there was no hike the week before, and none the first few days after. In 2002 and 2003, there were Thursday hikes both weeks. So, there’s no pattern there to look at either.
No prediction this week
I am taking back my prediction from Monday afternoon and changing to “no prediction” for the week. Gasoline retailers subscribe to a daily market report that someone was willing to share with me on Tuesday, and the report indicates that Chicago-based wholesale prices are significantly lower than elsewhere in the country right now, due to regional oversupply. Since I only have daily access to the NYMEX prices (it’s free!), I don’t feel I have the information to make the right prediction for the next few days. Prices could fall to $2 a gallon, jump to $2.49, or just stay where they are. Maybe things will be clearer next week. By Monday the 30th, it all cleared up. We got two price hikes in a row, to $2.39 on Friday and to $2.49 on Monday. Sheesh!
Monday, November 7, 2005
1:45PM: I’ve been doing about as well as a coin flip since late August, when Hurricane Katrina blew through. So, I apologize for being WRONG half the time, although I’m losing the Gas Game, too. So, what’s going on here? Wholesale and retail prices have been dropping like a stone since the end of September. I’ve heard that retailers are selling below cost, but they are waiting for Speedway/Marathon to hike prices first. Then there’s something I theorized back in May that is starting to look like a new rule to follow: Retailers are very impatient during uptrends in wholesale prices, but during downtrends, they are in no hurry to do price hikes, even if it means selling below cost. If anything, it is a clearance sale of merchandise they paid too much for.With futures prices down another 5 cents today, the price cuts can continue around town. But all that can turn around at any time. So, no prediction right now, enjoy the cheaper gas, but keep vigilant for an always-possible price hike.
There was a price hike, sort of. Speedway reset to $2.29, but in some parts of town and in Allendale, they took it back right away because the competition didn’t match the new price.