Expert: Gas price swings predictable

Whatever guess you may have as to why gas spiked 45 cents per gallon on Wednesday is probably wrong, according to GasBuddy fuel analyst Patrick DeHaan.
Marie Havenga
Jun 26, 2014

 

It’s not Iraq and it’s not the upcoming holiday. It’s not refinery shutdowns or rotten weather.

Even when wholesale prices remain stable, West Michigan gas prices ratchet up and down like a predictable pinball ricochet. DeHaan said that’s because area stations are ultra-competitive. Unlike most of the country — where there are small fluctuations in price — Michigan, Indiana and Ohio prices tend to swing wildly.

“Take an area like West Michigan and compare it to any other city in the country where there’s not price cycling,” DeHaan said. “The other city would see prices holding steady. In West Michigan, prices would go far lower and go far higher.”

The price cycling pattern typically plays out like we’re seeing now.

As prices bottomed out at $3.50 earlier Wednesday, stations were losing money, according to DeHaan. A leading station then decides to raise prices and others follow suit.

So, now that gas is around $3.95 a gallon, expect a brand to start undercutting by a penny or two. That trend continues typically for a week or week and a half as each station tries to outdo others with a lower gas price.

The competition to churn prices downward continues until no profit margin remains, according to DeHaan — and then, a big jump.

“When they can’t undercut anymore, that’s when you see the price hikes, then the whole war begins all over again,” he explained. “Those little 2-cent declines add up to 40 cents over a week and a half. It’s a mini price war every time.”

Many local motorists waited in line Wednesday as word leaked out that gas prices were shooting upward. Spring Lake Township resident Mike Wheeler said a friend told him.

“I’ve got to save a buck where I can,” Wheeler said as he waited in his red pickup truck at the Admiral station in Spring Lake. “I don’t think it should be going up and down 40 or 50 cents. Is that price gouging? I can see 10 cents, but 45 cents is just crazy.”

Gas prices are hindering family fun, he said.

“I have a boat,” Wheeler said, “and it’s hard to have fun with the family and find things to do when gas is higher.”

Wheeler estimates he saved $4 to $5 fueling up before Wednesday’s spike.

“That’s almost a meal,” he said.

Read the complete story in today’s print or e-edition of the Grand Haven Tribune.

Comments

angelshorty18

So why does "west michigan" have to do this crap when other places don't? Gas in mi was 3.95 memorial weekend, I went down to nashville tn for the weekend & gas there, in a huge, popular city, was anywhere for 3.43 to 3.63. Our gas prices here are comparable to hollywood & people here don't make nearly the kind of money they do! Especially when a lot of people are unemployed due to the crappy economy. When does it end? & they wonder why people can't make a living anymore.

Vladtheimp

If you are really interested in knowing, the taxes on a gallon of gasoline in Michigan are 59.79 cents (including the federal tax which is a constant in all states) - 6th highest in the U.S. The taxes on a gallon of gas in Tennessee(including the federal tax which is a constant in all states) are 39.80 cents - 38th in the U.S. http://www.api.org/oil-and-natur...

That fact alone explains the largest part of the price differential, and of course the EPA places requirements on refiners which have variable impacts on the cost of producing gas depending on the age of the refinery; transportation costs depending on how close the refineries are to the destination of the gas.

"Comparable to Hollywood" ? The link shows that the taxes on gas are far higher in California - why not look closer, to Chicago, http://www.illinoispolicy.org/wp...

Although surely there are opportunities for the private sector to game gas prices, the first culprit to look at is the government - not to mention that the Obama administration is making it harder to extract oil and gas from public lands, and to build refineries; requires different formulations of gas with ethanol to combat non-existent global warming, and killing the economy and jobs with over-regulation - if that's what people really want, let them pay for $5.00 gas now and European prices in the future - keep voting in Democrats and liberal Republicans.

deeg

The timing of these price increases is troubling to me. Gas always goes up mid week through Friday or Saturday. Just in time for all of the travelers and boaters to be gouged.

skyking007

I think it is the speculators. What ever it is, it is a rip off. Prices change because of fear that prices will rise. The Quicker we go to electric cars and wind and solar for electric, the better of America will be.

ohwell

You do realize what it takes to make these electric cars? Oil and other all the other resources it takes to make the batteries for these cars. Then what do you do with them when they need to be disposed of?

Simple fact is, if we would quit exporting the oil we get from our soil, we would be better off.

rj18rad

In case you didn't know, you can't store power created by wind and solar. It's useful when there is wind and sun, but what are you going to do on the days it's not there?

Boycotter

will get gouged by whatever energy source is given to us O-mericans.

ohwell

It's price gouging 101, no other excuse. And the gas stations claim they are making money when it was at $3.50, I call BS on that one too. Time to close up shop then, if that is the case. When the oil companies are making billions (yes with a B) every quarter, I have an issue with them crying poor.

brodennel

With the oil companies it's called greed oil companies will charge what they want and nobody will do anything about it

1bigreddog

I think it's terrible how you can take advantage of the public like you do. It's like a game. I feel bad for the people who have families and want to do fun things but can't afford the price of gas to go anywhere.

Real Americans, yeah right !!!!

Lanivan

US oil production is at a 30 year high, and for the first ever, the US is exporting domestic oil to other countries. None of this has had any effect on reducing the price of gas whatsoever. Most experts believe gas prices are ultimately influenced by geopolitical uncertainty.

Complain as you will, but it will get us nowhere.

rj18rad

Exporting OUR oil is the worst thing we can do. We need to build more refineries here and keep OUR oil!

Michael Johnson

What do we do when that runs out?

ohwell

We have more than enough oil in this country to last a long time. No worry about running out anytime soon. Especially if they would quit exporting OUR oil, and importing THEIR oil. That makes about as much sense as buying a diet Coke with your Big Mac.

Lanivan

Obama has been doing some awesome things to increase US gas independence and decrease foreign oil dependency.

new vehicle fuel-efficiency standards Tuesday, requiring that the U.S. auto fleet average 54.5 miles per gallon by 2025, an uncontroversial move that, unlike other administration energy policies, was endorsed by industry and environmentalists alike.

The new rules, announced by Transportation Secretary Ray LaHood and Environmental Protection Agency administrator Lisa P. Jackson, expand on existing standards requiring American-made cars and light trucks to average 34.5 mpg by 2016. They will significantly cut U.S. oil consumption and greenhouse gas emissions by the time they are fully implemented, according to the EPA.

http://www.washingtonpost.com/na...

Had the US not ditched the fuel efficiency standards of the Carter administration during the OPEC crisis by the incoming Reagan administration, the likelihood that we would be struggling with volatile gas prices would be greatly diminished.

But then the Oil Industry might not have made the greatest corporate profits in world history for the last 30 years.

userxp101

I can't believe how many people drive large trucks and suv's. I can imagine it costs a ton to fill those tanks up every week. Why would you want to burn so much of your paycheck up like that. Its your money and if you can afford it more power to you. But if we all could be more efficient it would mean that they would have to lower prices and, besides its better for the earth.

Vladtheimp

I can't believe how many people drive unsafe econoboxes that place them and their loved ones and passengers in real jeopardy for physical harm or death, just to satisfy the government's requirements to halt non-existent global warming, which the regulations don't do anyway because the rest of the world consumes what they can.

Many of us worked diligently for the better part of our lives so we could afford to drive a comfortable and safe vehicle; so we could afford air conditioning instead of sweating like third world citizens of the world; so we could make the economic lives of our children better than what we had. Many of us understand that putting ourselves and our loved ones in jeopardy by driving tiny electric/hybrid vehicles is not "better for the earth" because the resources to produce batteries, not to mention the production of electricity that runs these boutique vehicles, uses more resources than used for a vehicle run on gas.

My wife and I will continue to pay for the gas to power our safe SUV's (not happily, because we both know that Democrats are running up the costs of energy for no scientific reason) and we will consider it money well spent.

GH55

How big is big enough? When that double bottom gravel truck blasts through that red light and squashes what ever you are driving, regardless of whether its a Fiat 500 or a Ford F250 King Ranch, like a bug on its big grill, and then rolls over you with is 30 some wheels, there is nothing big "enough"!
That is a dumb argument!
At least in my small car allows me to perhaps avoid the crash.
Gluttony!
If you want to drive a behemoth, don't complain about gas prices! You are the cause!

Vladtheimp

Wee of course, the crashes most likely to be encountered when driving an unsafe econobox are with double bottom gravel trucks with 30 wheels running red lights, and not SUVs and pickup trucks. And of course, when discussing rabid environmentalism, the laws of physics don't apply. Dumb, dee dumb dumb.

GH55

I prefer to be called a "rabid environmentalist", then a "Dumb, dee dumb dumb" rampant government conspiracy theorist! I am so important, that out of 300,000,000 people in the USA, "they" are coming to get me! And those physics laws concerning the environment don't cover burning fossil fuels until we can't breath!
I don't even think about what gas costs, and I am not worried the President is coming to get my guns! Don't have any!

Tri-cities realist

You are the model citizen of a brave new world...

Keeneye

bless your heart.

matt227

If you DONT have to drive DON'T use the public transportation, by a moped or motorcycle, ride your bike whatever it takes. I own a small lawn care business so 90% of the time I have no choice but when I do, I'll make other arraignments if I have to, not going to be doing much boating or on my wave runners this year I can see. Thanks Gas Stations for the price gouging plain and simple...I believe its against the law to gouge that much.

Say no to new taxes

Ban export of energy out of this country and you'd see prices drop 40% overnight.
"Globalism" has done nothing but gut this country of good paying jobs and increasing the cost of living.

 

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