CAMARILLO, Calif. --The U.S. average retail price of regular grade fell 9.04 cents per gallon in the past two weeks, to $3.5795, according to the most recent Lundberg Survey of approximately 2,500 U.S. gas stations. It follows 12 straight weeks of low price volatility: During the period April 18-July 11, price changes up and down were small. This two-week drop is the first big drop of 2014, and the price sits 9.51 cents under its year-ago point.
But it did not come from a crude oil price drop. It came, largely, out of U.S. refiners' pockets. Refiners have been cutting wholesale prices like crazy, passing through earlier oil price cuts that occurred from mid to late June, in order to keep their run rates high and chase sales.
It is still midsummer, and gasoline supplies are building instead of dropping.
Crude oil prices edged up during the two weeks, in part because earlier oil market ebullience about Libya's production comeback proved to be ill-founded. Hopes for more Libyan oil short term were dashed. Other inputs to higher oil prices included the downed passenger jet over Ukraine.
While refiners lost margin on gasoline big time in these two weeks, retailers gained. The retail margin improvement on regular grade was less than two cents, but amounts to a total expansion of 10.86 cents per gallon over the past five weeks. U.S. average retail margin on July 25: an excellent 21.32 cents--a level not enjoyed since late Sept. 2013.
Refiners are still slashing wholesale prices, and retailers are still receiving the cuts. As more retailers are able to pass through their buying price reductions, prices at the pump will likely fall another few cents over coming days, assuming oil prices stand pat.
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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