Bear with me here for a minute. This post gets a little pointy-headed, but Ive done some more work on my pricing model this afternoon. These difficult to predict spikes have me irritated, so I made some changes to incorporate ethanol price premiums into the model. Most gas is E-10, so itll only impart about 10% of its cost on to the final blend. Ive coupled Fridays CBOB price with the highest spot ethanol price I have for Friday ($4.08). Assuming 90/10 blend plus the same usual factors for tax, transportation, etc. Im coming up with a Spike Line of $3.4475. Thats still $0.1375 below yesterdays closing OH retail average and $0.1225 below the current average. Technically speaking, we should be in good shape in Ohio, witnessed by our lack of a price hike today. Now for MI and IN, I can actually see the spike making sense for them today based on the changes to the model. Using the CBOB and ethanol prices above in conjunction with the usual tax, etc. factor for those states, I came up with Spike Lines of $3.67 and $3.66 for IN and MI, respectively. Their retail averages yesterday evening were $3.598 and $3.628 for IN and MI, respectively. Both of those retail averages are BELOW the Spike Line and puts them in jeopardy of a Spike. What will be interesting now is to see if Ohio follows the same model, because we dont look to be in the same shape as Indiana and Michigan. That is, we are still healthily above the Spike Line. Time will tell, but it never hurts to hedge your bets...
Posted on: Sat, 29 Mar 2014 21:28:48 +0000
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