Friday, May 23, 2014

Gas prices jump in time for Memorial Day

It's been more than three weeks since my previous dispatch from the front lines of the gas price war, Corner station took a week to return to its trench.  That's not because I haven't been watching; I have.  It's because, despite two charges by the corner station into No Man's Land, the other front line refused to budge.  For the past three weeks, the three stations down the block held at $3.65 per gallon for regular, this despite the corner station advancing to $3.79, holding for several days before staging a orderly retreat to $3.65, then charging again to $3.89, which meant $4.04 midgrade, and standing its ground for several days again before beating a hasty retreat over the weekend.  This week repeated the pattern, with the corner station again making its claim in No Man's Land at $3.89, again.  This time, it retreated within a day to $3.87, then yesterday to $3.85, bringing midgrade to $4.00.  All the while, the corner stations remained at $3.65.  Today, they finally moved, raising their prices to $3.75.  This ended their determined stand to maintain prices that they had maintained since I reported them increasing prices to $3.65 in Another advance in the gas price war.  That happened on April 15, 2014, 38 days ago.  I must admit, five-and-one-half weeks of price stability was a remarkable achievement.  The prediction I made at the end of April of no price increases for the next week held true for three weeks!

Follow over the jump for the underlying price trends, a comparison with last year at this time, and some thoughts on where things might go from here.

According to GasBuddy, the national average is down since I last reported on April 30th.  That was the last day of prices remaining at a plateau of $3.66.  All through the first two weeks of May, the national average glided to a low of $3.62, where prices flattened out.  During three days, they've risen like a balloon to $3.64.  In other words, the national average reflected the local situation--relative price stability.  Detroit's average has been more volatile, dropping from $3.74 on the 30th to $3.68 on May 12th and 13th, the same day when the national average stopped declining.  Since then, it shot up to $3.76 on May 15th, stabilizing at $3.75 until May 20th, then shooting up again the past three days to $3.83.  With that kind of price environment, it's no surprise that the neighborhood outlets raised prices; $3.65 was extremely underpriced, while $3.75 is about right.

Despite the price increase, gas is still cheaper locally than it was last year, as I described in The corner station returns to form in the local gas war while quoting Corner station surprises in gas war plus bonus "big gas" commercial.
Yesterday, I dr[o]ve by the corner station and they dropped their price to $3.75 from $3.84.  Even more surprising, it was selling gas for less than the three stations down the street, which were all at $3.79.  Usually it's the corner station that leads in raising prices, not lowering them.
That initial report was on May 24, 2013, so the prices exactly a year ago today were $3.84 for the corner station and $3.79 for the three stations down the street.  That gives a weighted average of $3.803.  The weighted average for today's prices is $3.775.  Once the corner station drops its price to $3.75 to match the other three, which I expect it to do tomorrow the comparison then will be to the lowered prices on the 24th of last year.  That weighted average was $3.78.  This year's prices will be lower than last year on the same date even if the corner station doesn't drop its price, which it will.

As for predictions beyond the corner station matching the neighborhood price, I'm not going to make them today.  It's a holiday weekend, and I'm going to stop while I'm ahead.

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