No Runny Eggs

Unless you’ve been in a cave the last month or are buying diesel, you’ve noticed that the bottom has fallen out of gas prices. For you out-staters, I’ve got some bad news for you; the Milwaukee area is now boasting the lowest average price in the state. According to MilwaukeeGasPrices.com, the average price of regular unleaded in Milwaukee is at $2.276 per gallon, while its sister sites are reporting average prices at $2.345/gallon in the Madison area and $2.330/gallon in Wisconsin outside of the Milwaukee and Madison areas. ‘Tis very interesting, since I’ve noted time and again that prices in Milwaukee have historically been and, as recently as last month, were higher than the rest of the state.

So, what’s changed in the last month? Could the price of ethanol, mandated at a 10% level in Milwaukee-area gas but not in most other areas of the state, have fallen below that of gasoline? Nope. While the Chicago Board of Trade no longer updates the futures price for ethanol on a real-time basis, their most-recent chartbook showed October 2006 ethanol futures settled at $1.87/gallon on 9/13. Meanwhile, October 2006 regular unleaded gasoline futures on the New York Mercantile Exchange settled at approximately $1.56/gallon on that date (the approximation is because I had to take that off of a less-than-precise graph rather than the chart provided by CBOT). Nope, it’s not the corn-a-hole.

If it’s not the corn-a-hole prices, could it be that the reformulated gas, also mandated in the Milwaukee area but not in other areas of the state, suddenly became cheaper than regular gas? While the trading price of the special blend used in Milwaukee (and Chicago) is not available publicly, NYMEX does have a futures market for the version of reformulated gas used in New York and New Jersey (I do note that this does not include the costs of either acquiring or mixing in the corn-a-hole). With the October 2006 reformulated gasoline settling at approximately $1.61/gallon on 9/13, we can also rule that out.

Why, then, is gasoline $0.05 to $0.07 per gallon cheaper in Milwaukee, if our special blend of gas and the ethanol we’re forced to burn are both more expensive than the gasoline available to the rest of the state? The answer is that Jim Doyle issued an executive order in early August that those stations and only those stations that sold ethanol-blended gasoline be exempted from Wisconsin’s minimum markup law, which mandates a hefty markup in the price of gasoline at both the terminal and retail levels. This would be the same person who, when the issue of repealing the minimum markup law came up in the Legislature (killed by outstate RINOs and ‘Rats), claimed that its repeal wouldn’t have any impact. Really? By my math, it’s had at least a $0.10/gallon impact here in Milwaukee, where it is no longer enforced.

You out-staters, don’t forget to “thank” Doyle on November 7 for artificially inflating your gas prices so he could try to buy a few extra votes in Milwaukee – vote Mark Green.