CAMARILLO, Calif. -- The U.S. average retail price of regular-grade gasoline rose another 7.24 cents per gallon (CPG) in the past two weeks, according to the most recent Lundberg Survey of approximately 2,500 U.S. gas stations. The current price, $2.9007, is the highest since November 2014. It has been rising for 10 weeks straight, a total of 31 cents since Feb. 9.
Crude-oil prices edged up further since April 20, and in most of the country the bulk of the remaining cost pass-through from seasonally more stringent gasoline specifications occurred.
Unless there are additional political risk premiums to be added to oil prices, on top of what is already built into price related to Iran and other issues, then raw-material costs would not likely be an up-price driver at the pump.
However, other downstream developments might be. U.S. refining sector idling of some capacity for planned and unplanned work cuts a bit into the pool of supply, while gasoline demand is decidedly meek. The one is at least partially offsetting the other. Downstream margins are another matter.
Refiner margin on gasoline gained a fraction of a penny in per-gallon terms. While refiners have mostly passed through seasonal cost increases of the lower Reid vapor pressure (RVP) regulations, not every single gallon of output already carries the entire cost burden of summer blend deadline compliance. Year to date, refining margin on gasoline languishes well below the 2017 average margin.
The fact that the current national pump price is 49 cents above its year-ago point is a demand dampener, as is less than celebratory jobs growth. Retailers on average recovered a modest 3 CPG in margin, but they are still pinched.
It is not an easy time for retail margin expansion, but the pressure is on for a few more cents. Regular-grade margin on May 4 was 14.83 cents, vs. calendar year average 2017's record-high accomplishment of 19.08 CPG.
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.