NEW YORK (CNNMoney.com) — Retail gasoline prices rose modestly for the second day in a row Thursday as Hurricane Ike entered the Gulf of Mexico, according to a nationwide survey of gas station credit card swipes. But wholesale gas prices in the region soared.
Wholesale jump: As the storm churned toward the Texas coast, wholesale gas prices were up more than $1.50. On Wednesday, a gallon of gas cost $3.25 on the Gulf Coast wholesale market, and by Thursday afternoon, wholesale gas cost more than $4.75 a gallon, according to Tom Kloza, the chief oil analyst for Oil Price Information Service, an independent publisher that follows wholesale and retail fuel prices in North America.
The Gulf Coast wholesale market is the largest bulk market for wholesale gasoline in the world, according to Kloza.
“They are absolutely going ballistic in the Gulf Coast,” said Kloza, and the pricing is based on fear of Ike shuttering refineries.
When wholesale gas prices go up, that pushes up retail prices, because dealers pass on the price jump to consumers. But Kloza said that given the oddity of the current situation, he does not expect prices at the pump to jump nearly as drastically as wholesale prices.
“You may see companies that traditionally pass on these increases only pass on a portion,” said Kloza. “It is very complicated but I don’t think you can use the normal metric,” in this situation.
The spike up in the wholesale market could come back down as quickly as it shot up, said Kloza. “We could be at $5 a gallon for wholesale tomorrow afternoon. We could be at $3.”
The futures contract for October delivery of wholesale gas was still trading around $2.78 a gallon
Sounds like you weren’t wrong.
Although I bet there is some gouging going on as well