Crude Oil Arrests Gasoline

Long price slide coming to an end, says Lundberg

CAMARILLO, Calif.-- The Dece. 21 U.S. average retail regular-grade gasoline price is $3.2579 per gallon, down 11.72 cents from two weeks ago, according to the most recent Lundberg Survey of approximately 2,500 U.S. gas stations. This makes for a total crash of 57.96 cents over 11 weeks.

But, it is coming to an end. Higher crude oil prices have hit refiners, who are passing them through into wholesale gasoline. Retailers are receiving the hikes and will pass them through to motorists.

Both refiners and retailers lost margin on gasoline big-time in the past two weeks. In the case of refiners, Dec. 21 was the lowest margin on gasoline since Feb. 10 this year, according to Lundberg data. Retailers are skinny too, with the lowest margin on gasoline since Aug. 24. Each of these downstream sectors are under serious pressure to seek some margin recover in the near future.

On Dec. 21 nearly one-third of U.S. markets surveyed show negative retail margin, as on average, wholesale hikes landed on retailers but hadn't been passed through. About a third have margin at 14 cents or higher. And about a third have between one and 14 cents. The U.S. average margin on regular grade sits at a bare 8.31 cents, versus 21.62 cents two weeks ago.

If crude stays approximately where it is now, then the hike at the pump may be in the five-to-10 cents range.

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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