Archive for October, 2008
October 14th, 2008
First the good news - we’ve had our first sighting of gasoline under $3 in Winnebago County. The South Beloit Price War has taken prices down to $2.99 a gallon. Rockford gas stations are still generally between $3.09 and $3.25 though.
Now the bad news - we might see a brief spike of prices in this area. Wholesale gasoline prices out of Chicago jumped almost 19 cents today to almost $2.44 a gallon.The Chicago region - which includes lucky us - was the only one to rise today, as falling oil prices are causing a general downward trend.
Here’s the explanation from Tom Kloza, chief oil analyst from the Oil Price Information Service:
I think it’s a combination of a few things. Some of the Great Lakes refineries were down for Autumn maintenance, and most of the Gulf Coast produced gasoline headed toward the supply-starved southeast. So, the Chicago market and to some extent the upper Midwest, was the Peter from which the market borrowed to pay Paul.
Suspect it will be short term - spot prices for Chicago gasoline can’t remain 60cts gal above futures or Gulf Coast prices for long, or else engineers may figure out how to construct a land barge.
In lieu of a land barge, expect either a brief uptick in prices locally or at least a stalling of the downtick. Don’t kill the messenger…
October 14th, 2008
Chicago Rockford International Airport’s efforts to grab more cargo service has been noticed by Air Cargo World, the largest magazine in the air cargo industry. And that in turn may get it noticed by some of the magazines 34,000 subscribers around the world.
It’s a story about airports looking to be congestion-free alternative cargo hubs.
“With cargo capacity near saturation point at many major airports, some carriers are seeking convenient alternate destinations. … In the age of shrinking profits amid a soft U.S. economy and a weakening dollar, selling RFD’s potential to international carriers just got easier.”
In the article, RFD Executive Director Bob O’Brien says O’Hare’s landing fees are twice that of Rockford’s - $3.31 per 1,000 pounds vs. $1.64. O’Hare’s average taxi time is also twice as much - 10 minutes vs. five here.
And, the article notes, there’s space available.
I wish I could say international airlines get all their information from our articles, but they obviously need to see it in sources like Air Cargo World before they’ll take notice. I imagine this will turn some heads.
October 14th, 2008
The average for the Rockford metro area is below $3.25 for the first time since March, and already the average is outdated. Quite a few stations in Rockford proper are just under $3.20 now so the average will be even less when updated tomorrow morning.
To stem the tide of comments that “prices aren’t falling fast enough” I’ll rely again on hard numbers.
Oil prices right now are still about 55 percent higher than they were when the runup began in early 2007. Meanwhile, gas prices - even in Rockford - are less than 50 percent above where they were back then.Gas prices are at a justifiable level given where oil is at. Hopefully, oil doesn’t go back up and we can enjoy deflated prices for a while.
Rockford is tied at 84thout of the nation’s 270 metro areas in gasoline prices, down a spot from yesterday. There are now 74 metro areas below $3 a gallon, up from 51 yesterday. There are still 3 metro areas above $4, but those are in Alaska and Hawaii.
Here are the prices from this morning (as always, courtesy of AAA’s fuelgaugereport.com):
Gasoline: Rockford dropped more than six cents to $3.24Â a gallon. We have the second-highest gas prices in the state - nine cents above East St. Louis while 29 cents behind Chicago. The Illinois average dropped five cents to $3.32. The national average dropped four cents to $3.16. Illinois has the 12th-highest gas prices in the nation.
Diesel: Rockford dropped more than a cent to $3.79 a gallon. We have the seventh-highest diesel prices in the state. The state average dropped three cents to $3.93. The national average dropped two cents to $3.82. Illinois has the 10th-highest diesel prices in the country.
October 13th, 2008
We’ve dropped under $3.25 in much of the area today, with illinoisgasprices.com reporting several places in Rockford with prices at $3.19 and below. Oil rebounded back above $80 a barrel, so it’s unclear how much farther they’ll drop, but there’s still room for this historic decrease.
Rockford ranks 83rd out of the nation’s 270 metro areas in gasoline prices, down 10 spots from last week. We’ll never be the cheapest, but we’re in line with our historic place
Here are the prices from this morning (as always, courtesy of AAA’s fuelgaugereport.com):
Gasoline: Rockford dropped more than two cents to $3.30Â a gallon. We have the second-highest gas prices in the state. The Illinois average dropped three cents to $3.37. The national average dropped four cents to $3.21. Illinois has the 11th-highest gas prices in the nation.
Diesel: Rockford dropped almost nine cents to $3.80 a gallon. We’re tied with the eighth-highest diesel prices in the state. The state average dropped almost three cents to $3.96. The national average dropped three cents to $3.83. Illinois the eighth-highest diesel prices in the country.
October 9th, 2008
With another drop today, oil is down almost 40 percent from its high in July. Gas prices are only down about 20 percent from that time. Ah-ha, say the Gouging Police, proof that they’re overcharging me at the pump. But you have to take a longer view to get a true picture of what’s going on.
As I’ve said all along, gas prices never went up as fast as oil prices did in this run up.
Since October, 2006, oil has risen 62 percent (including today’s decline). Gas prices have risen about 55 percent in that time. That’s the closest those two numbers have been since summer, 2007.
At the worst mark, this July, oil had risen 150 percent while gas had only risen 80 percent. Retailers, refiners and others in the gasoline supply chain saw their profit margins decrease as the cost of their raw materials skyrocketed. So, basically they’re making that money back on the downward slope. On average over the course of this energy price craze, they’re making a profit in line with history.
What they *could* have done is raise gas prices at the same rate as oil ($5.75 a gallon in July, anyone?). But they didn’t, partly because that would have looked much worse … but mainly because it would have absolutely killed demand and cause everyone in the supply chain to really lose money. Instead, they ratcheted up prices as much as they felt they could, hoping to eventually see prices slide and profits get restored.
Economists have an interesting term for this - rockets and feather. Retailers know they can only raises prices so much on the upswing, because customers are hypersensitive and will go to a different site to save a penny or two. So they have to be more conservative. But when prices are on the downswing, they have more leeway because shoppers are less vigilant.
Again, on balance they’re coming out as much ahead as they would in more “normal” times - that is, a decent profit like what any other capitalist venture reasonably stands to make. Perhaps they’re making more now, but they sure were taking the hit back this summer.
(I know, I know, I’ve oversimplified the business model here … there’s a lot more that goes into pricing than simply “what oil costs.” But oil has been the driving force, and watching oil prices in the past two years more than justifies gas prices.)
One other note - we in Rockford are still feeling the remnants of Hurricane Ike.Marathon spokesman Robert Calmus told me today the company has limited sales of gasoline to retailers at its Rockford terminal - those with contracts get 100 of their normal volume, but anyone looking to buy gasoline on the spot market has to go elsewhere. Also, I imagine, anyone who has a particularly busy day and needs more than their normal volume has to go elsewhere. When you have to get gasoline from farther away, transportation makes the cost go up.
The measures are due to problems on a major pipeline that serves this area. Until that’s resolved, we in northern Illinois won’t see as much savings as we might otherwise. (Peoria, which is seeing gas dropping below $3 in spots, gets its gas from barges up and down the Mississippi River. Stations in Wisconsin get their gas from Madison and other places. We’re just lucky, I guess.)
October 8th, 2008
Prices in Rockford fell below $3.50 a gallon today for the first time since April, already making AAA’s numbers below obsolete (AAA gets the prices from the last credit card swipe at stations the day before). This should send the metro area average below $3.50 in tomorrow’s data.
The next milestone to watch is $3.46, which was the record from May, 2007, that lasted until the runup this spring. Then there’s $3.25, which is currently the bottom that most analysts predict. Finally, there’s $3.02 (the lowest mark of this year, from back in February) and of course $3.
I got an email today from a reader who notes gas is under $3 in a community in Minnesota. You’re going to see that in places, because of lower taxes, supply costs and costs of doing business. But this morning, only four of the 270 metro areas are averaging below $3, all in Kansas, Missouri and Oklahoma. A few more will follow suit, but it’ll take more economic bad news to really send prices lower. And at that point, we’ll have other problems.
Rockford, by the way, ranks 72nd out of the nation’s 270 metro areas in gasoline prices.
Here are the prices (as always, courtesy of AAA’s fuelgaugereport.com):Gasoline: Rockford dropped almost three cents to $3.54 a gallon. We have the third-highest gas prices in the state. The Illinois average dropped more than three cents to $3.61. The national average dropped more than three cents to $3.44. Illinois has the seventh-highest gas prices in the nation.
Diesel: Rockford dropped four cents to $3.95 a gallon. We’re tied with the seventh-highest diesel prices in the state. The state average dropped a cent to $4.11. The national average dropped two cents to $3.99. Illinois the sixth-highest prices in the country.
October 6th, 2008
From Australian comedy duo John Clarke and Bryan Dawe comes an interview with an Australian senator after an oil spill. Thanks to coworker Kathi Edwards for this video!
[kml_flashembed movie="http://www.youtube.com/v/K5eWNHXTUDM" width="425" height="350" wmode="transparent" /]
October 6th, 2008
Gas prices are the lowest since April, and there are plenty of signs they’ll keep going down, especially up here in northern Illinois. Oil prices dropped below $90 a barrel for the first time in eight month, though the big holdup in the Southeast and Midwest is that half of the infrastructure in the Gulf of Mexico is still shut in after Hurricane Ike. Until that all comes back online, bringing gasoline supplies to this area back to normal, we’ll still have somewhat of a premium up here.Â
Here are the prices (as always, courtesy of AAA’s fuelgaugereport.com):
Gasoline: Rockford dropped more than three cents to $3.60 a gallon. We have the fourth-highest gas prices in the state. The Illinois average dropped more than a cent to $3.67. The national average dropped two cents to $3.50. Illinois has the sixth-highest gas prices in the nation.
Diesel: Rockford gained a cent to $4.01 a gallon. We have the sixth-highest diesel prices in the state. The state average dropped a cent to $4.14. The national average dropped two cents to $4.02. Illinois the ninth-highest prices in the country.
October 3rd, 2008
President Bush is expected to sign a bill that nearly doubles Amtrak funding, a victory for rail proponents. It gives money for capital improvements to speed trains up and takes other steps to help the reduce delays.
Of particular importance locally is the $380 million a year over the next five years that would be granted to states to develop intercity rail routes. Illinois has been particularly aggressive in this, adding routes from Chicago to St. Lous, Quincy and Carbondale, and studying routes to Rockford/Dubuque and to the Quad Cities.
The feds would pay for up to 80 percent of a given project, awarding grants “on a competitive basis for projects based on economic performance, expected ridership, and other factors.”
Here’s the catch. The lack of an Illinois capital plan has been the big hold up on restoring service to Rockford, and it would most likely continue to be the hold up. Here’s what Christina Mulka, spokeswoman for U.S. Sen. Dick Durbin, D-IL, said:
It is possible that illinois and the Rockford route could compete for a grant in the State Capitol Matching Grant program before a capital bill is passed. IDOT would be the agency choosing projects to apply to the FRA for funding (then that project would compete with projects from across the country). The problem is with this program and with other competitive federal funding, without a capital bill Illinois looks like a less attractive compared to other states that do have capital funds.
Now, there is some bright side to this. If the state does come around to coughing up its $32 million for the Rockford route, perhaps the feds would agree to throw a bunch more money this way to make it an even better, faster, more popular route. One can dream, no?
October 2nd, 2008
Prices continue to fall in Illinois, as supplies come online after hurricanes Gustav and Ike and oil prices tumble on bad financial news.
Parts of the Midwest and Southeast were hit hardest by the supply drops during hurricane season, and we’ve had inflated prices for a bit now. But the discrepancy is coming down steadily.
Some perspective:
The last time the national average was this low (just under $3.60 a gallon) was in late April. The Illinois average then ($3.71) was six cents lower than it is now. The Rockford average ($3.65) was seven cents below where it is now. So we’re getting close to being back to a normal gap between national and local gas prices. Again, that’s because it’s taken time for refineries and pipelines to turn back on after the hurricanes passed.
Meanwhile, oil fell to $94, back almost to where it was pre-hurricanes. In fact, we’re finally at the point where gasoline has risen about as much in the past year as oil. Oil is up 24 percent from this time last year, while gas is up around 29 percent. Those two numbers would be closer if the “hurricane premium” of six or seven cents locally wasn’t in play.
Earlier this week, I quoted two Illinois energy trading analysts saying where they see gas going. Both said it should go down to at least $3.25 a gallon by year’s end, but one said it could hit $3 or less. I personally don’t know if we’ll see *that* much of a drop, but $3.25 seems likely if nothing big changes.
Here are the prices (as always, courtesy of AAA’s fuelgaugereport.com):
Gasoline: Rockford dropped three cents to $3.72 a gallon. We have the third-highest gas prices in the state. The Illinois average dropped three cent2 to $3.77. The national average dropped two cents to $3.60. Illinois has the fifth-highest gas prices in the nation.
Diesel: Rockford dropped just over a cent to $4.06 a gallon. We have the fifth-highest diesel prices in the state. The state average dropped a cent to $4.19. The national average dropped a cent to $4.08. Illinois the ninth-highest prices in the country.
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