Thursday, July 3, 2014

Gas drops in advance of July 4th

It's been more than two weeks since I wrote the following in The corner station awakens, advances, then retreats.
Yesterday, it had matched the rest of the neighborhood stations at $3.85.  Throughout this entire episode, they kept their prices where they have been for a couple of weeks.

According to GasBuddy, that's exactly where they belong, as the metro Detroit average has been $3.95 for the past three days and the local stations normally are a dime cheaper.  Prices aren't going down any time soon.  If anything, they might go up based on the slight increase in the national average from $3.63 to $3.66 during the past week as well as the increase in crude oil prices Calculated Risk noted two days ago.
Last week, the corner station made its usual charge into No Man's Land, raising its price to $3.95 while the rest of the neighborhood stations remained at $3.85.  By the end of the week, it returned to $3.85.  Since there was no real movement, I didn't bother posting about it.

This week, prices began to slide off the plateau where they had been all month.  Monday morning, the three stations down the block lowered their prices to $3.79.  By that evening, the corner station had joined them.  That's where all of local outlets have remained since.

The decline is also happening nationally and regionally.  The national average peaked at $3.69 a week ago and has glided down to $3.68 today.  The Detroit average peaked even earlier and has fallen farther.  It almost reached $3.96 a little over two weeks ago, making the local stations almost underpriced, then has floated down a dime to $3.86.  If this trend continues through the holiday weekend, the stations down the street could even drop their price down to $3.75 next week.  Crude oil price trends support the possibility, as Reuters reports.
Brent crude extended the previous session's losses to fall to a three-week low, dropping 32 cents to $110.92 a barrel by 0230 GMT. U.S. oil declined 44 cents to $104.04, also sliding to a three-week low.
I'd be tempted to post Professor Farnsworth, except that prices are much higher than they were at this time last year, when they hit a seasonal low of $3.37 before going up to $3.59 then falling to $3.38.  I don't expect such volatility.  Instead, I expect a disciplined decline.  To illustrate, I'll post a photo of a parachute drop instead of a roller coaster.

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