CAMARILLO, Calif. -- Motorists are paying less at the pump compared with two weeks ago, but neither refiners nor gasoline retailers had to suffer with margin declines to let that happen.
The drop in prices of the two major crude-oil benchmark grades during the past two weeks—approximately 6.5-cents-per-gallon (CPG) equivalent—enabled U.S. refiners to cut wholesale gasoline prices 7.64 CPG, which enabled retailers to cut street prices by 7.42 CPG, according to the most recent Lundberg Survey of approximately 2,500 U.S. gas stations.
The symmetry of the three spheres of price cutting and the speed of the dropping dominoes are striking.
The June 23 average retail price for regular-grade gasoline is $2.3234 per gallon, sitting 4.19 CPG under its year-ago point.
Refiners gave up just a little bit of gasoline margin while retailers gained a fraction of a cent. The June 23 retail margin on regular: 24.17 CPG. Included in that average are Cleveland and Newark, N.J., with margins skinnier than 9 CPG. Margins in Seattle and Portland, Ore., are at the moment better than 50 CPG. In the greater Los Angeles market, margin sits at just over 35 CPG, retailers having cut street prices by close to 9 CPG to $2.89. Meanwhile, in the L.A. spot market, so sensitive to any West Coast refining capacity downtime, prices have crashed nearly 36 CPG in the past five weeks.
Supplies of crude and gasoline continue to be very flush, and price competition is pushing consumer prices down. Unless oil prices reverse direction quickly, retail gasoline prices may decline a few more cents near-term, an encouragement for demand.
During the first half of 2017, retail gasoline margin on all grades combined is 18.77 CPG. This is around one penny inferior to the full calendar-year pooled margin in 2016 and 2015, but shines a little brighter than pooled margin in 2014.
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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