Posts filed under 'Fuel price musings'
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 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.
September 17th, 2008
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
September 16th, 2008
Just passing the time, waiting for gasoline supplies from the Gulf Coast to get back on track so we can see some real relief at the pump.
Was on an enlightening teleconference today with Tom Kloza, chief oil analyst for the Oil Price Information Service, about the effects of Hurricane Ike. He said, of the fact that refineries and pipelines were shut down, “A pipeline is like the aorta. That aorta hasn’t been pumping much blood here.”
Later, on his blog, he had the quote of the day:
Everyone loves to demonize members of the gasoline supply chain. If you listen to motorists talk about gasoline prices, you might conclude that gasoline marketers not only club baby seals, they urinate on them after the deed is done.
Wholesale gas prices out of Chicago increased this morning, OPIS reported. No word yet on how they closed, or what oil companies are charging retailers for the stuff.
Road Ranger’s Web site lists its Rockford prices as down to $4.09 a gallon. I’m sure others are down there, too, but I’m not out on the street.
Here’s what the price situation for the metro area, state and nation was as of this morning (prices courtesy of AAAs fuelgaugereport.com):
Gasoline: Rockford increased three cents to just under $4.20 a gallon since Monday morning. That’s less than a cent off the all-time record, but hopefulyl it’s also the high-water mark. We have the second-highest gas prices in the state. The Illinois average rose two cents to $4.18, seven cents off its record. The national average rose a penny to $3.85, reflecting how we’re being hit harder than most of the country. Illinois has the fourth-highest gas prices in the nation. Other top states are always-high Alaska ($4.40) and Hawaii ($4.31), Midwestern states Michigan ($4.19) and Indiana ($4.17, a record for the lower-taxed state) and Southeastern states Georgia ($4.16, South Carolina ($4.10), Tennessee ($4.09), North Carolina ($4.08), Alabama ($4.05), Kentucky ($4.03) and West Virginia ($4.01). Shows where the pain is, right up a line from the hurricane north.
Diesel: Rockford increased a cent to $4.10 a gallon. We have the seventh-highest diesel prices in the state. The state average increased a a cent to $4.30. The national average increased a fraction of a cent to remain at $4.19. Illinois the 11th-highest prices in the country (including the District of Columbia).
September 16th, 2008
According to the Oil Price Information Service, wholesale gasoline prices are back on the rise in Chicago - up 13 cents to $3.39 a gallon so far. It’s the only region in the nation showing increases today, as we rely on Gulf gasoline to flow up here. Look for prices to remain over $4 a gallon retail until wholesale drops below $3.20 a gallon and stays there. It could be a couple weeks, but *eventually* we’ll have big movement downward. Crude oil is down to $92 a barrel today. The last time oil was so cheap, gas was down just below $3.20 a gallon in Illinois. That’s about where local experts are predicting prices could be in a month, once supplies are back flowing here.
The last time gas averaged less than $3 a gallon in Illinois? Last Halloween, where oil was somewhere between $81 and $86 a barrel. We’ll see how far things slide.
September 15th, 2008
Gas prices spiked up here this weekend, as they did all over the Midwest (and down to the Gulf Coast). Wholesale prices - the price the retailers pay to get the stuff - ran over $4 a gallon up here, meaning under a normal markup we could have seen prices close to $5 a gallon. We didn’t, as in some cases the suppliers ate the cost while in others the retailer did. It seems like all sides know this will be a short-term supply problem, and decided not to pass all the increase on. I would say it’s good PR for the oil companies and retailers, but they’re getting blasted just for increasing prices like they did.
With oil prices falling and gasoline futures dropping as well, I predict prices will be back down to $3.40 or less in a month. Some local retailers think it’ll go further, to about $3.20 or less. Knock on wood, and hope another hurricane doesn’t hit.
Here’s what the price situation for the metro area, state and nation were as of this morning (prices courtesy of AAAs fuelgaugereport.com):
Gasoline: Rockford increased more than 15 cents to $4.17 a gallon. We have the second-highest gas prices in the state. The Illinois average rose eight cents to $4.16. The national average rose five cents to $3.84. Illinois has the fifth-highest gas prices in the nation.
Diesel: The diesel supply chain hasn’t been hit hard, apparently, as prices there are stable. Rockford dropped almost two cents to $4.09 a gallon. We have the seventh- or eigth-highest diesel prices in the state (No report from Quincy). The state average dropped a fraction of a cent to $4.29. The national average dropped slightly to $4.19. Illinois the 11th-highest prices in the country (including the District of Columbia).
September 10th, 2008
I appreciate lively conversation, and am glad to incite it on this blog. That means you’re reading, thinking about what you’re reading and taking time to respond. That’s great.
At the same time, I’m amused at the “kill the messenger” attitude. A couple of readers have basically said I’m in cahoots with the gas stations/oil companies and have a stake in ad revenues or “hidden agendas”.
Well, my agenda is not so hidden. It’s to explain what is going on, and why, as best I can. Let me explain a few things:
- Â Wholesale gasoline prices did indeed spike on Monday - 36 cents a gallon in the Gulf Coast region, and about 20 cents in Chicago (don’t have a link, but it comes from the Oil Price Information Service, in emails I’ve been getting). Gas prices spiked in Chicagoland (not just Rockford) a day later. That’s a fact
- Wholesale prices went down yesterday, but are back up today, about 11 cents to $3.29 a gallon. From an OPIS email I just got -Â Â “The supply situation in Chicago is helping keep things elevated. Midsummer saw a few refineries have some problems that caused a disruption to gasoline production. A power outage last week that shut down ConocoPhillips’ Wood River,
Ill., plant, which at presstime was still not back to full rates, made gasoline supplies even thinner.”
- Even at $104 a barrel, oil is 43 percent above a year ago (last post, I mistakenly put that in cents, not percent. Yikes). Meanwhile, gasoline in the Rockford metro area is 21 percent above a year ago. From the start of the oil runup in 2007 to the peak in the middle of this summer, oil prices almost tripled while gas prices didn’t quite double. So that pretty much torpedos the argument that gas prices always rise as fast as oil…
- Oil companies, by and large, don’t own gas stations. ExxonMobil got out of that business, as did ConocoPhillips, precisely because retail isn’t that profitable. They make their money on gas and oil production, not distribution. Retailers are reacting to the spike in prices, not setting it, and it’s not just a local phenomenon.
Any questions?
Here’s what the price situation for the metro area, state and nation were as of this morning (prices courtesy of AAAs fuelgaugereport.com):
Gasoline: Rockford increased more than three cents to $3.81 a gallon. We have the second-highest gas prices in the state. The Illinois average rose four cents to $3.87. The national average rose almost two cents to $3.67. Illinois has the fourth-highest gas prices in the nation.
Diesel: Rockford increased more than two cents to $4.17 a gallon. We have the fifth-highest diesel prices in the state. The state average increased half a cent to $4.31. The national average dropped slightly to $4.21. Illinois the 15th-highest prices in the country (including the District of Columbia).
September 8th, 2008
It never fails. Whenever gas prices go up unexpectedly - at least unexpectedly for consumers - I get calls and/or emails accusing retailers of “gouging.” Those calls and emails never come in when gas prices drop significantly (or when the Rockford metro area is paying less than most of the rest of the state), with people meekly saying, “Hey, we’re being undercharged here!”
So even though oil is down around $106 a barrel today, gas is up to $3.78 a gallon in our metro area (and about $3.83 a gallon in the city). And people complain.
Well, there are (at least) two factors at play here. First of all, consumers have the misconception that the world oil price is a direct indicator of gas prices (oil goes up, gas goes up exactly the same; oil goes down, gas goes down the same). But oil has to get shipped, refined into gasoline, shipped some more, sold to retailers, shipped some more and put into tanks. And at every step of the way, there are price points that are affected by supply/demand, pipeline issues, refinery issues, weather, taxes, etc. There are regional differences in wholesale petroleum prices, which force retailers to have regional differences in prices. There are issues that can upend one region and not others (a refinery or pipeline shutdown, for example).
What apparently is happening now is that the threat of Hurricane Ike has raised prices at several levels (fear of supply hits = price hikes to curb demand until supply gets back in line … it’s the market working to avoid gas lines, really.). Meanwhile, a ConocoPhillips refinery in Illinois was out last week due to a power outage and a small fire. Those events, and others I’m sure I’ve missed, have caused an upswing in retail prices up here and in much of the state.
Here’s the other thing - perspective. Even at $106 a barrel, oil is still around 49 cents above where it was a year ago. Gas is up 20 percent in Rockford. I’ve said this repeatedly, but I’ll say it again … gas prices never rose as far or as fast as oil did, so it’s not fair to criticize retailers for keeping prices up a bit while oil falls. They were taking a hit for a while and now they’re trying to get back to the margins they were seeing back before the run up…
Here’s what the price situation for the metro area, state and nation were as of this morning (prices courtesy of AAAs fuelgaugereport.com):
Gasoline: Rockford increased two cents to $3.78 a gallon, up about eight cents over the weekend. We have the second-highest gas prices in the state. The Illinois average rose a fraction of a cent to $3.84. The national average dropped almost a cent to $3.66. Illinois has the seventh-highest gas prices in the nation.
Diesel: Rockford dropped almost four cents to $4.12 a gallon. We have the fifth- or sixth-highest diesel prices in the state (no report from Quincy today). The state average dropped more than two cents to $4.31. The national average dropped almost two cents to $4.22. Illinois the 15th-highest prices in the country (including the District of Columbia).
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