Corner station took a week to return to its trench

When I last reported on the local gas price war, the corner station was camped out in No Man's Land.

Tonight, the three stations a few blocks away are still at $3.65, while the corner station has only dropped to $3.85.  No one is at the $3.69 I predicted last week.  About the best I can do is point out that the average of three stations selling at $3.65 and one station selling at $3.85 is $3.70.  Yeah, I called the mean price to within a penny, but that's not what I really meant or expected last week.  I still have two days for all four outlets to equalize this week, but I'm beginning to wonder.  I'm having trouble remembering when the corner station last defended a price increase this stubbornly.

Friday evening, the corner station dropped its price to $3.79 when I was next door.  I went into the pizza place and it was still $3.89, then returned back to my car a few minutes later and the price had dropped a dime.  Monday evening, the corner station had inched down to $3.75, where it was Tuesday morning.  Tuesday evening, when I went to get more pizza, it had finally dropped to $3.65, matching the three stations down the block, none of which had budged for two weeks.  That's where all four stations remained today.

GasBuddy shows that the local situation of resisting increased gas prices is widespread.  The national average has barely budged above the $3.65 of the previous report, remaining steady at just below $3.66 for the past week.  This is the longest that the U.S. mean has not increased since the second week of February.  As for the Detroit average, the metro area topped out at $3.79 a week ago and has declined to just above $3.74 today.  The neighborhood stations are no longer underpriced and so should stay at $3.65 through the weekend.

By the way, prices are still at or below where they were at this time last year.  Last week, the comparison was with Flooding bumped up the gas price rollercoaster.

The prices are already starting to drop.  The corner station has matched the rest of its competitors and is selling gas at $3.69, a drop from the $3.75 late last week.

So the corner station wasn't there yet last week, but the other three were four cents a gallon cheaper.

This week the comparison would be with the first week described in Corner station retreats into trenches after charging No Man's Land.

[T]he corner station started another round of price raising and failed, as they posted prices of $3.89 two weeks ago.  The other stations didn't bite, and by the end of the week, everyone was selling for $3.65.

This is exactly where prices are now, so no year-over-year increase.  The next question becomes "will prices stay at or below where they were a year ago next week?"

On Monday, [the corner station was] selling regular for $3.79 while the three stations down the street had prices of $3.75.  That lasted until this afternoon, when the three stations dropped regular down to $3.70.  By this evening, the corner station matched their price.

Not only the local and national retail trends suggest that the answer will be yes, but the underlying wholesale prices do, as well.  Follow over the jump for the details.

Reuters reported that Stocks rise on U.S. growth prospects; oil prices fall.

Brent crude for June delivery settled down $1.03 to $108.07 a barrel. June U.S. crude settled down $1.54 at $99.74 a barrel.

How did this happen?

Oil fell toward $108 a barrel with stocks in the United States at a record high on a steep increase in the Gulf Coast region, and prospects for higher exports from Libya.

U.S. total commercial crude stocks rose 1.7 million barrels to just under 400 million barrels, the largest volume on records going back to August 1982.

Gulf coast oil stocks rose by 5.7 million barrels to just over 215 million, also their highest level on record.

In addition to the good news, there was also no saber rattling over Ukraine, as last week's headline of Brent crude rises over $1 on Ukraine war of words indicated.  The result was that Brent crude is down more than two dollars from last week's $110.33, while U.S. crude has continued its slide from $104.30 two weeks ago and $101.94 last week to just under $100 this week.  The underlying pressure from crude oil to keep gasoline prices increasing has gone away for now in the absence of a fear premium.

What about gasoline?  Wholesale prices fell, as another Reuters article describes.

RBOB futures suffered their biggest one-day decline in more than six weeks, leading declines across the energy complex, after a bigger-than-expected build in U.S. gasoline and distillate stocks.
...
Hardest hit across the energy complex were RBOB futures, with the front-month May futures contract down almost 2.2 percent in early afternoon trading. May RBOB futures settled and went off the board at $3.0077 per gallon, down 1.82 percent on the day.

Last week, May RBOB was selling for $3.1023 a gallon.  There's no pressure for prices to rise from wholesale gasoline, either.  Based on the fundamentals, I expect no price increases next week and even the possibility for prices to drop as low as $3.59.  Stay tuned.