Gas Margins Hit January High
Retailers take advantage of drop in wholesale prices to blow past national average
ST. PETERSBURG, Fla. -- January 2016 was a very good time to be in the gasoline business.
That’s according to the latest Convenience Store Grab-N-Go research note by Raymond James & Associates, St. Petersburg, Fla.
Retail margins on regular grade gasoline averaged around 26 cents per gallon (CPG) in January 2016, which was a record high for the month and 14% higher than a year ago. This is also a whopping 42% above January’s three-year average. Margins rose on a year-over-year basis across most regions of the United States, except for the Northeast, where they fell 14%.
What led to the record margins? Retailers took their time responding to an approximate 20-CPG drop in wholesale prices during the first two weeks of January, said Raymond James, whose coverage includes Casey’s General Stores, CST Brands, Murphy USA, CrossAmerica Partners, Sunoco LP and TravelCenters of America.
The Raymond James analysts do expect margins to moderate sequentially from January as production cuts and a move toward summer blends by refineries begin to pressure retail prices; however, at least for the first half of February, margins on a national basis were still double what they were a year ago.
National diesel margins declined 24% year over year. They were, however, 34% above the three-year average.