CAMARILLO, Calif. -- The U.S. average retail price of regular-grade gasoline rose 2.88 cents per gallon (CPG) over the past two weeks to $2.4615. The rate of increase has slowed by more than two-thirds vs. the prior two-week period, according to the most recent Lundberg Survey of approximately 2,500 U.S. gas stations.
Meanwhile, the prices of light-grade crude oil slipped impressively. Retail prices rose instead of falling because both refiners and retailers had gasoline margin improvements. Refiners took that oil price cut and passed some, but not all, into wholesale gasoline. Retailers took that wholesale gasoline price cut and increased prices at retail, on average.
Refiner margin on gasoline already includes most of the cost increases from the required shift to summer blends as well as most of the cost jumps from recently higher Renewable Identification Number (RIN) prices that some of them must pay. Retail price on gasoline also includes most of these costs.
In the short term, if oil prices don't retreat strongly and quickly, any further retail price increases are likely to slow further, or maybe even cease.
Crude-oil prices remain king. Oil markets care about every single barrel of world supply and demand, and about all viewpoints. Every day, they vote on opposing influences. For more than a year, the resulting vote has corralled oil prices within a range of about $40 to the low $50s per barrel, both before and after the Organization of the Petroleum Exporting Countries’ (OPEC) November 2016 supply-cut agreement.
That relative crude-oil price stability is a big reason for the rather low price volatility in the U.S. gasoline market vs. the historical norm. So far, the spring 2017 gasoline price rally is rather muted: The average retail price is up about 8 cents and the weighted wholesale price is up about half that amount from the beginning of the year. OPEC will review its supply-reduction agreement five weeks from now. And the oil market will review that review, giving input to U.S. prices on the street.
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.