Saturday, August 30, 2014

Bad and good news for gas prices over Labor Day weekend

Original at the New Orleans Times-Picayune.

I concluded A great day for business as usual with an observation about local gas prices.
None of the neighborhood outlets have gone below $3.35 and the corner station actually made a brief sortie into No Man's Land, raising their price to $3.49, then dropping it within the day back to $3.35.  That reflects what I see on GasBuddy, which shows that the national average bouncing off a bottom between $3.42 and $3.43 with the Detroit average hitting $3.41 a few days ago and returning to between $3.43 and $3.44.  That makes the prediction I made last week look good.
Check back next week to see if the neighborhood outlets drop below $3.32 and head to $3.29.  I don't think it will happen next week.
So far, it hasn't happened and the retail and wholesale data indicate it isn't likely to happen this week either.
That was Tuesday night into Wednesday.  The next day, prices started rising.  My wife and I were driving around in Ruby and saw that the corner station was at $3.65.  Meanwhile the three stations down the street were still at $3.35. She now knows that she doesn't have to drive far to shop for gas.  Yesterday, the corner station was still selling regular for $3.65, so I figured that the other neighborhood outlets might have raised their price.  I got confirmation yesterday (today as I type this), as all three of them were now selling regular for $3.49.  I was right to expect that Labor Day would act as a floor on prices, in this case, one that prices would bounce off of.

That written, were the local stations too high or in line with their usual pattern of being up to a dime cheaper than the metro Detroit average?  GasBuddy indicates they are in line, as the Detroit average shot up to $3.50 yesterday.  The three stations down the street were right were just below the average, while the corner station was too high.  Sure enough, by the end of Friday, its price went down a notch to $3.59.

As for what next week holds in store, I expect prices will drop after Labor Day, just as they usually do.  For starters, the national average has barely budged, staying at $3.43.  Next, there is a local event, Arts, Beats, and Eats, that is keeping up demand and prices during the Labor Day weekend.  Once that is over, the floor will go down like a slow elevator, taking prices with it.

The combination of a gas price rise combined with the holiday weekend is exactly the kind of story local news outlets love.  Following my usual policy of "if it moves, it leads," I give WXYZ's Gas prices rising the honor of going first.

This report at least explains why Michigan is experiencing this price rise while the rest of the country seems to have avoided it.

WXYZ had plenty of company in covering this story.  Follow over the jump for the stories from MLive and the Detroit Free Press.

First, the bad news version from MLive: Gas prices head north as Michiganders prepare to do the same for Labor Day.
The 1.12 million Michiganders expected [to] travel this weekend will face slightly higher gas prices than they were expecting after prices took a jump on Wednesday.

The average gas price in Michigan is $3.597 per gallon right now, according to Michigan gas prices hit a monthly low on Aug. 21, according to, when it was at $3.42. It's crept up by more than 10 cents per gallon since then and is more than 10 cents above the national average.

But the average price is likely to stay or go down slightly this weekend, said Senior Petroleum Analyst Patrick DeHaan.

"I'm not expecting prices to go up any more this weekend," he said.
Even with the bad news lead, MLive couldn't help but pass along the same good news that I expected; prices won't go up any more and will likely go down.  Of course, it comes from GasBuddy, so it's the same source that I use for forecasts.

The Free Press emphasized the good news from the very beginning: Lower gas prices for Labor Day travelers, festival fun for others.
More than 1 million Michiganders are expected to hit the road this Labor Day weekend for one last trip ahead of forecasts calling for another bitter winter.

And the Michigan Department of Transportation is trying to help ensure smooth travel experiences, suspending many projects for the holiday weekend beginning today.
Barring a hurricane, the average gas price for unleaded gas is about $3.48 per gallon, 13 cents lower than travelers paid last year.
Not only is the average price lower than it was last year, when the neighborhood stations were all at $3.69 on this date, but lower than two years ago, when they were $3.99.  In fact, the New Orleans Times-Picayune reported that prices are lower going into the Labor Day weekend than they have been since 2010.  As I wrote in Fear premium a dead cat bounce as price falls three times in five days, my prediction that the national average won't go above $3.80 this year looks fairly secure.  Just hope that neither a major hurricane nor a war creates a fall price spike in the next couple of months.

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