Gasoline Buyer's Advisory: Buy gas now - it's going up

Updated, Friday, November 10: Gas prices have increased again to a new average of $2.46 a gallon in San Diego, - up almost a dime since last Friday, and up 8¢ since Monday evening. At this time gasoline supplies in California are abundant, according to the California Energy Commission. UCAN believes that the sharp increase immediately after the mid-term elections on Tuesday were intentional.

We are convinced that the industry timed the price spikes to occur immediately after the elections in an effort to remove high gasoline prices from the increasingly long list of voter concerns about energy dependency in America. Some stations have gone up by as much as 30¢ since Monday as their wholesale price has skyrocketed.

Today, the wholesale price of gasoline dropped 12¢ since Wednesday, but not enough to counteract the damage that has already been done. It is likely that gasoline prices will continue to rise in the near-term, as the wholesale price refeects what we call the "malarial gas economy" (see our January 2006 commentary).

Updated, Wednesday, November 8: Prices have increased almost 2¢ since yesterday, and 4.1¢ in the last three days. UCAN's survey shows the average price of gasoline is $2.421 a gallon for regular unleaded. Generally speaking, a move of 5¢ in a week is considered to be a "major move," and so far this week, we've seen the price increase 4¢ in less than three days. Why? The oil business has decided to start taking profits now that they have managed to successfully remove energy as a voter issue.

Expect further price manipulation in the coming days as the oil industry to begin its 58¢ march upward in a concerted effort to get prices above $3 a gallon prior to the annual Spring Gouging Season.

Updated, Tuesday, November 7: Just as we've been predicting for several months now, the price of San Diego gasoline has jumped upward immediately and sharply on election day with the fastest price hike in more than six months in San Diego county. The current average price for gasoline is now $2.409 a gallon, up three cents from yesterday's average, and the trend appears to be national.

According to UCAN's Gasoline Project Manager, Charles Langley, "Gas prices appear to be going up by the hour."

The price hikes are happening at a time of year when historically, gasoline prices almost always decline to their lowest annual level.

According to UCAN's Executive Director, Michael Shames, "There are no longer any doubts about gas prices being manipulated for political reasons. These increases are synchronized like a Swiss watch and bode poorly for California drivers in the coming months and next year."

UCAN advises consumers who are concerned about high gasoline prices to buy gas now. "You will pay more tomorrow than you will today." says Langley.

San Diego gasoline prices reached an all-time, record shattering high of $3.43 a gallon in May of 2006. More than a dollar higher than the current average price in San Diego. Nationally, prices have decreased by 80¢ a gallon, and appear to be heading back up to the $3 level at a speed that rivals what is currently being seen in California.

UCAN has long asserted that the sole reason prices dropped by more than a dollar a gallon since May was to pacify voters who had routinely stated that gasoline was a top priority in their lists of political concerns. Now that gasoline is "cheap" the cost of fuel has been taken off the voters' radar as an election issue, and after today, the oil industry will continue to gouge consumers aggressively.

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Updated, Monday, November 6: The oil industry appears to have its feet firmly in the starting blocks for what may be some very quick price run-ups immediately after the election. Today, gasoline cost 1.2¢ more than it did on Friday morning. While this small increase in the retail price seems insignificant, it was preceded by huge price hikes to independent dealers last week (see Friday update, below).

When the price to independent dealers increases to the point where they can not compete with brand name stations, large price hikes are usually just around the corner. Independently owned stations are almost always the most aggressive cost-cutters. When they are unable to compete, with the major brands, the major brands react by raising their prices to accommodate for the lack of competition.

UPDATE: Friday, November 3, 2006 -

Gas prices reverse downward trend. Prices are going up again.

On Wednesday of this week, gas prices reached their lowest point in the last six months, when our index showed an average Regular Unleaded price of $2.364 per gallon.

Today, this steady six-month downward trend was reversed when this morning's survey (taken at 6:00 AM) showed a slight increase of half a penny of $2.368.

In the last two weeks, there has been tremendous volatility on the "spot" market for gasoline in Southern California, with prices jumping up 13¢ in the last 48 hours and more than 23¢ since Monday. If the increase holds, the prices charged by independently owned stations could increase by as a much as 20¢ a gallon.

Unbranded Independent stations are bellwethers for high prices. When their prices increase, the major brands almost always follow within a few days. In other word, unless the market calms down, we can expect sharp increases in the next week for gasoline - probably right after election day.

The "Spot" price is the price a fuel broker must pay for raw 84-octane gasoline when it is purchased with cash on the spot. Typically, fuel sold on the spot market is surplus gasoline that is not being used by the major brands. Small, independently owned stations get most of their fuel from the spot market. Usually, gasoline sold on the spot market is much cheaper than the gasoline available to brand-name dealers.