CAMARILLO, Calif. -- As crude oil pricing cutting accelerated in the past three weeks, refiners have been passing through the discount bounty into wholesale gasoline, and then some, according to the most recent Lundberg Survey of approximately 2,500 U.S. gas stations.
They have slashed racks and dealer tankwagon prices even more than oil producers clashed oil prices to them.
Retailers are still receiving the cuts, and have passed through about half the amount that wholesale has crashed.
The U.S. average retail price of regular grade is down 11.64 cents per gallon over three weeks, to $3.2577. It's been 16 weeks straight of pump price declines. During the 23 weeks since the price peaked back on May 2, the decline is 46.68 cents. The October 10 average is the lowest since Nov. 22, 2013.
The ethanol price crash and seasonal shift to lower-cost winter gasoline also contributed to retail prices crashing, but overwhelmingly the top cause was the steep price drop-off of the raw resource, crude.
Refiner margin shrank as they ripped wholesale prices. Retail margin, meanwhile, in the October 10 snapshot, is stupendously wide, a generous 32.8 cents per gallon on regular. As more and more retailers receive and absorb wholesale price cuts from their suppliers, they can be expected to forfeit margin. The U.S. average retail price will likely retreat another dime or more in coming days.
There has been a transfer of wealth from refiners to retailers in terms of gasoline margin over several weeks, and it is now in retailers' hands to transfer wealth to motorists in the form of pump price reductions.
And there has been a wealth transfer from oil producers to the downstream. Several world oil producers have been upping their output, reducing contract prices, or both, as they chase weakening world oil demand growth that is suffering from weaker economic conditions. Refiners, jobbers, and retailers are in composite delivering that oil production bounty, at lower prices, to consumers.
Camarillo, Calif.-based Lundberg Survey Inc. is an independent market research company specializing in the U.S. petroleum marketing and related industries.
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