Gas drop back below $4 a gallon in Rockford

September 17th, 2008 at 05:23pm Thomas V. Bona

Sometime this afternoon, stations started going down to $3.99 a gallon. I know CornerMarket Shell has done it, as has Road Ranger, and I assume others. This reflects the drop in wholesale prices out of Chicago, which fell to near $3 yesterday, according to the Oil Price Information Service. (There’s usually at least a day lag because the companies selling gas don’t tend to change their prices until after trading closes in the evening.)

Wholesale dropped down to $2.83 today in Chicago, according to OPIS. That indicates another drop is iminent this week. Now, many of you aren’t going to buy this, but as I noted  earlier this week when wholesale prices spiked to over $4 a gallon, oil companies and/or retailers took a hit when they didn’t raise the price much above that. If there’s any perceived delay on prices falling, it’s partly due to the supply chain effectively “catching up” to get some of their money back. Or would you have preferred $5 a gallon gas earlier this week, followed by a steeper drop?

Here’s a “for instance.” Say a retailer filled up their tanks earlier this week with $3.47 a gallon wholesale, because they’re worried they won’t be able to get product later in the week, If they’re still working off that, they can either drop it and stay competitive with other retailers - and lose money - or keep it up and lose customers.

It’s a complex business, and it’s tough times all around

Entry Filed under: Fuel price musings