Monday, September 23, 2013

Looks like gas prices have dead cat bounces, too

When I described the local gas prices in Gas prices in Michigan bouncing off a bottom, I displayed some pessimism.
I have been loath to break out Professor Farnsworth this year for low gas prices and what's transpired since I posted Good news on gas prices from Professor Farnsworth supports my usual reluctance.  The next day, the corner station raised its price to $3.65.  The three stations down the block held at $3.45.  Yesterday morning, the corner station undercut their price, selling regular at $3.44.  That's lower than before the Syria fear premium took effect.  Yesterday afternoon, the price went up again, this time to $3.59.  I didn't see what the three stations down the block were charging for gas, but I suspect they went up, too.  Why?  Econobrowser has an answer.

It turns out that prices all over metro Detroit and Michigan have risen in the past few days.  The day I posted Professor Farnsworth, the average prices in the state and metro area bottomed out at $3.46 and $3.48, respectively.  Prices in both areas immediately shot up, peaking in Michigan yesterday at $3.59.  In Detroit, they're currently plateauing at $3.53.  In that kind of environment, I expect all the neighborhood stations will follow suit, not just the corner station.
I should have been more optimistic.  Saturday afternoon, the local station had already dropped its price to the Detroit average of $3.53.  Yesterday, it lowered it some more to $3.45, back where it was when this all started.  With that kind of price history, I doubt the three stations down the block moved a cent.  I expect to see all four of them at $3.45 or less this morning when I drive past.

As for the relevant average gas prices, the national average is currently $3.49, Michigan is between $3.55 and $3.56, and Detroit is at $3.50.  All of them are going down like parachutes.  In this environment, combined with the neighborhood stations usually selling regular at up to a dime below the Detroit average, I wouldn't be surprised to see them selling gas at $3.39 within a week.

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