Retail Prices Resume Fall
More to come, says Lundberg
CAMARILLO, Calif. -- The U.S. average retail price of regular grade gasoline has resumed its decline, briefly interrupted between late August and early September. In the past two weeks, the price slipped 6.4 cents, according to the most recent Lundberg Survey of approximately 2,500 U.S. gas stations. The current average price is $3.5207 per gallon, a hefty 31.31 cents below the year-ago point.
This drop comes mostly from lower crude oil prices, passed through by refiners into wholesale gasoline. Retailers have been getting price cuts and passing them to motorists.
There is likely more to come, perhaps five to eight cents per gallon, if crude oil prices do not quickly shoot back up.
One impetus to further U.S. average retail price cuts is that Western region prices, especially in California, bucked the trend and jumped about 16 cents in these two weeks. Without that regional rise, the U.S. average price cut would have been deeper.
The California spike is already old news, because wholesale prices have crashed with resolution of some refining glitches. For example, PADD 5 branded rack has declined to within 0.42 cents of its Sept. 6 average. On a spotty basis on the street, some hyper and other unbranded have already begun a down correction, now that unbranded rack has plummeted nearly 21 cents per gallon. In the powerful dealer buying price channel, the average price in the West is now less than four cents above what it was on Sept. 6.
Another impetus for more retail price cutting around the country is downstream margins. Although refiners have now had a meager improvement in gasoline margin and are under pressure to regain further, retail margin is decidedly flush, enough to give up some. From less than 14 cents per gallon on regular back on Aug. 23, retail margin on regular is now above 22 cents. Year-to-date, retail margin exceeds full-year 2012 margin by half a penny. Some of this wider retail margin will probably soon be gifted to consumers at the pump.
Camarillo, Calif.-based Lundberg Survey Inc. is an independent market research company specializing in the U.S. petroleum marketing and related industries.