CAMARILLO, Calif. -- The U.S. average retail price of regular grade gasoline leaped 20.98 cents per gallon in the past two weeks to $2.5384, according to the most recent Lundberg Survey of approximately 2,500 U.S. gas stations. It is up nearly 47 cents since the price finally bottomed out six weeks ago.
But the price is still a deep discount to its year-ago point, 97 cents per gallon, an encouragement to consumers.
The chief cause of this recent street price hike was not crude oil, nor was it a shortage of gasoline. Crude has traded narrowly of late, with up influences and down influences offsetting one another. U.S. gasoline stocks are certainly flush and the usage rate of national refining capacity is attractive for the time of year, more than 88%.
So production problems in OPEC nations Libya and Iraq, and labor union problems at several U.S. refineries, are not the big gasoline price movers.
Instead it is a combination of improved margins on gasoline among both refiners and retailers, and government regulations affecting gasoline costs that drove the street price hike.
Federally, vapor pressure caps hit much of Southern California first, and the wholesale deadline of March 1 has been met. And, California gasoline costs more to make in the first place.
The rest of California phases in with summer blend product in coming weeks. For most of the rest of the nation, the full pass-through of higher summer production costs will occur be completed in May, to meet the June 1 retail deadline.
The average street price hike in California overall during the past two weeks was nearly 57 cents. An additional input to California gasoline cost comes from the California's home grown anti-global warming law, designed to shrink gasoline demand, wherein secret auctions of greenhouse gas permits are playing a role in pump prices.
But the biggest cents-per-gallon input to the latest gasoline price increase was downstream margins. Both refiners and retailers enjoyed margin expansion on average in the Lundberg snapshot of March 6 compared with February 20. Unless crude oil prices strengthen significantly, this may prove to be the end of the national street price rise, at least for now. Locally is another story, as in some markets retail margin has been severely curtailed.
Camarillo, Calif.-based Lundberg Survey Inc. is an independent market research company specializing in the U.S. petroleum marketing and related industries.
Click here for previous Lundberg Survey reports in CSP Daily News.
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