CAMARILLO, Calif. -- The U.S. average retail price of regular grade gasoline fell 13.3 cents during the past two weeks, to $2.0691 per gallon, according to the most recent Lundberg Survey of approximately 2,500 U.S. gas stations. The price is off a humongous $1.6534 per gallon from its May 2, 2014, high.
Now, after close to a year of retail gasoline price declines, the pump price looks ready to head upward.
The two biggest reasons for the latest retail price cut are lower crude oil prices and lower retail margin. While recent oil declines came more from weak world oil demand growth versus flush world oil supply with dollar strength a mere add-on to the descent, now dollar strength versus other currencies is the chief cause of oil price erosion. And crude's decline was shallower than it had been.
In this two week period, retail gasoline prices fell far more than wholesale did. Retailers forfeited a whopping 12.05 cents per gallon on regular grade margin, leaving them just 14.99 cents--a far cry from the 30-plus cents they often achieved late last year and through January 9.
Retail margin was a marvelous 33.87 cents on regular grade as recently as December 19.
Now that the retail margin balloon has popped, there's precious little room, if any, for retail price cuts to continue. In the January 23 snapshot, a handful of markets have apparent negative margins. Retail prices may already be bottoming, as nationally during the past 10 days unbranded rack has recovered nearly a dime with branded prices also turning upward. Daily Lundberg wholesale surveys show U.S. average unbranded up 9.63 to $1.3724 since its January 14 bottom point. The Midwest bottom for unbranded was a day earlier at $1.2184; 11 days later it has recovered 12.71 cents to $1.3455. The West Coast stands out with an unbranded surge of 14.77 cents since January 14.
It would take a renewed and vigorous slide in crude oil prices, which currently is not looming, to reverse the wholesale gasoline price turnaround taking place.
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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