Posts filed under 'Fuel price musings'
October 27th, 2008
With the continued drop over the weekend, the Rockford metro average is as low as it’s been since April, 2007, back around the time this whole mess was starting. Oil is also around levels from back then, meaning we’re finally back to some equilibrium in pricing.
Bob Trojan and others have asked me to chart the rise and fall of oil vs. gas prices, and I finally found a great chart online, via gasbuddy.com. It doesn’t chart local prices, just state and national (but the state average has always been close to Rockford’s). Also, the gas data relies on people posting prices on the Web site, not AAA/OPIS’s data, but it’s still instructional. It shows, as I’ve said all along, that gas prices never jumped up near as much as oil did, and were slower in coming down to make up for that:
Here are today’s prices (as always, courtesy of AAA’s fuelgaugereport.com):
Gasoline: Rockford dropped three cents to $2.72 a gallon. We have the third-highest gas prices in the state. The Illinois average dropped almost three cents to $2.83. The national average dropped three cents to $2.67. Illinois has the 13th-highest gas prices in the nation, including the District of Columbia.
Diesel: Rockford dropped five cents to $3.39 a gallon. Unfortunately, we’ve seen that level a lot more recently (this February). We have the ninth-highest diesel prices in the state. The state average dropped almost six cents to $3.56. The national average dropped four cents to $3.44. Illinois has the 10th-highest diesel prices in the country.
October 20th, 2008
OPEC is talking about cutting oil production to stop the slide in prices, with suggestions that it could be in the neighborhood of 1 to 2 million barrels per day.
This while, “Deutsche Bank AG lowered its 2009 crude-oil price estimate by 35 percent to $60 a barrel, citing the possibility of a `’major world recession.’” Analysts say if OPEC limits its cut to 1 million, oil could still fall below $60.
The always entertaining Phil Flynn thinks OPEC can’t push prices up above $80 a barrel for a sustainable length of time, unless the economy really turns around or the weather does something funky.
“Long term oil is headed to $50 but with the swings we could see sizeable upswings along the way,” Flynn said.
October 20th, 2008
We finally hit a few milestones this weekend. The average gas price for the Rockford metro area fell below $3 a gallon, then continued to fall to its lowest level of the year. Now, gas in Rockford costs less than it did a year ago.We’re even close to overtaking the national average.
I see prices in the city at $2.89 a gallon this morning, suggesting the metro average will fall further. How far will this drop?
Here are the numbers (as always, courtesy of AAA’s fuelgaugereport.com):
Gasoline: Rockford dropped three cents to $2.93 a gallon. We still have the second-highest gas prices in the state - one cent above East St. Louis while 36 cents behind Chicago. The Illinois average dropped three cents to $3.09. The national average dropped three cents to $2.92. Illinois has the 11th-highest gas prices in the nation.
Diesel: Diesel, not so much. Rockford rose more than a cent to $3.68 a gallon. A year ago, it was only $3.16 - this shows how global demand for diesel and related fuels is even stronger than for gasoline. It still has dropped 40 cents in the past month, which is at least some relief. We have the fifth-highest diesel prices in the state. The state average dropped more than four cents to $3.76. The national average dropped three cents to $3.64. Illinois has the ninth-highest diesel prices in the country.
October 16th, 2008
With gas prices now hitting $2.99 around Rockford, the metro average should drop significantly when AAA updates numbers tomorrow. The last time we had a metro average below $3 a gallon was Feb. 1, based on a brief drop at the end of January. Could we be back there this week?
Before today’s drop, Rockford was 79th of the nation’s 250 metro areas in gas prices. Less than half, 103, of them were below $3 a gallon. Only 2 - in Hawaii and Alaska - were still above $4.
Here’s where prices were at before this morning’s drop (as always, courtesy of AAA’s fuelgaugereport.com):
Gasoline: Rockford dropped more than five cents to $3.14 a gallon. We still have the second-highest gas prices in the state - eight cents above Quad Cities while 33 cents behind Chicago. The Illinois average dropped four cents to $3.24. The national average dropped more than four cents to $3.08. Illinois has the 12th-highest gas prices in the nation.
Diesel: Rockford dropped more than six cents to $3.72 a gallon. We have the seventh-highest diesel prices in the state. The state average dropped four cents to $3.88. The national average dropped more than three cents to $3.76. Illinois has the ninth-highest diesel prices in the country.
October 15th, 2008
Reports of gas around $2.99 in Belvidere and South Beloit now. Rockford proper is down to $3.09. With oil dropping another chunk today, that should send further relief down the line in prices at refineries, terminals and at the pump. I perhaps will have to eat crow on my earlier predictions that we weren’t going to see gasoline under $3 in Rockford.
Don’t get too used to it, though. We’re entering the low-demand season and once travel picks up next year, prices will likely rebound. Unless we have a further plummeting of oil caused by ongoing economic crises. And then, we’d have other problems to worry about…
October 15th, 2008
Early reports are that wholesale gasoline prices out of Chicago are back down today. We’ll see if they stay that way. If so, then you’ll see a continuing drop out here.Here’s the latest (as always, courtesy of AAA’s fuelgaugereport.com):
Gasoline: Rockford dropped more than four cents to $3.19 a gallon. We still have the second-highest gas prices in the state - eight cents above East St. Louis while 29 cents behind Chicago. The Illinois average dropped more than four cents to $3.28. The national average dropped more than three cents to $3.13. Illinois has the 12th-highest gas prices in the nation.
Diesel: Rockford dropped half a cent to $3.78 a gallon. We have the seventh-highest diesel prices in the state. The state average dropped almost a cent to $3.92. The national average dropped two cents to $3.80. Illinois has the ninth-highest diesel prices in the country.
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
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.)
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