Crude Cuts Still Coming Through
Gasoline prices continue slide, says Lundberg
CAMARILLO, Calif. -- Retail gasoline lost another 6.19 cents per gallon in the past two weeks, and the price slide now totals 18.38 cents since the peak six weeks ago, according to the most recent Lundberg Survey of approximately 2,500 U.S. gas stations.
Another fact helpful to motorists is the current discount of more than 12 cents under the year-ago price.
Crude oil enabled the drop. If no sizable oil price increase occurs soon, retail gasoline will likely keep heading down. The U.S. benchmark crude oil contract closed at $91.48 per barrel, shuddering at European economic and currency weakness as well as unimpressive U.S. economic conditions. Just a week ago it closed at above $96.
Currently, both refiner and retailer margins on gasoline are wide, but as the former continue passing through lower oil prices and the latter continue passing through the wholesale price cuts they received, downstream margins will shrink and street prices will drop--maybe another five to 10 cents in the near future--if crude oil cooperates.
In the West, where the national street price crash began back in early April, in the past two weeks retail prices bucked the trend and rose dramatically as regional refining issues tightened supply; however, as refineries normalize operations, wholesale prices are tumbling. In the past week alone, since May 11, Western unbranded rack crashed nearly 34 cents per gallon on average following spot prices crashes, versus the U.S. average unbranded dropping about 15 cents.
Also in the West: Branded rack cuts in the past week averaged some 12 cents. Dealer buying prices in the West peaked after racks did, and have dropped about eight cents for the week with the exception of one big brand.
May 18 retail margin snapshot: While a few markets afforded just single-digit margin on regular grade, nearly half had margins between 10 and 20 cents; most of the rest had 20 to 30 cents. More of the low margins are in the East; more of the high ones are in the West. The U.S.
average retail margin year-to-date is 13.17 cents, substantially off 2011's full-year 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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