CAMARILLO, Calif. -- Nationally, the regular-grade retail gasoline price dropped 0.46 cents in the past two weeks, even though crude-oil prices bounced up the equivalent of about a dime per gallon. Refiners passed through higher oil prices into wholesale gasoline, but retailers did not—thereby slashing their margin by nearly half, according to the most recent Lundberg Survey of approximately 2,500 U.S. gas stations.
Since most of the oil price increases were in the past few days, the decimated retail margin is partly due to timing. Nevertheless, retailers are under pressure to recover some of that margin quickly as regular grade is at a mere 11.2 cents.
The oil price bounce came mostly from two sources. One is the anticipatory futures market zeal about a possible extension of the Organization of the Petroleum Exporting Countries (OPEC) output curtailment through March 2018, to be decided at its formal meeting next month. The other is a weaker U.S. dollar versus other currencies. The oil price hike, with the West Texas Intermediate (WTI) near-month futures price above $50 per barrel and Brent nearing $54, has put those two highly traded light grades below what they were six weeks ago. In more than a year, there has been no dramatic upward oil price trajectory.
It is thanks in part to that largely stymied oil price climb that the U.S. gasoline market has not shown its common “Spring Price Spike” this year. In the past month, the U.S. average retail price is down 5.85 cents. Since Jan. 6, despite seasonal cost hikes from spring/summer-blend requirements and despite the seasonal demand curve, it has edged up a tiny 2.53 cents. If pump prices gain from here without an oil price surge to push them, it will likely be due to retailers regaining a few precious pennies of margin.
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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