Gasoline Price Increases Slow Down

Retail margin still too meager, Lundberg says

CAMARILLO, Calif. -- The August 24 U.S. average regular grade retail gasoline price rose 6.8 cents in the past two weeks, to $3.759 per gallon, according to the most recent Lundberg Survey of approximately 2,500 U.S. gas stations. This is about one-third of the price hike seen during the prior two-week period.

This price sits nearly 15 cents above the year-ago price, but also nearly 21 cents below the high for the year just four-and-a-half months ago.

The two basic feedstocks for finished gasoline remain the top causes of higher pump prices: crude for petroleum products, corn for ethanol.

Several dramatic news developments may link to gasoline prices; however, as of August 26 they have yet to impact crude or gasoline supplies.

Hurricane Isaac has teeth on edge for potential damage in the United States, and the Amuay refinery explosion in Venezuela where 39 people were killed and the refinery was closed, may or may not become discernible gasoline price inputs.

Barring significant cuts in or threats to petroleum supply, the U.S. gasoline market is in comfortable shape: The refining capacity use rate is very high despite some remaining plant upsets around the country, gasoline stocks are flush, while demand is about to take its usual seasonal downturn.

Meanwhile retail margin remains exceptionally low at 6.5 cents per gallon on regular, having regained barely more than a penny in the past two weeks.

Behind that average, in some markets retail margins are in the red on average thanks to recent wholesale price hikes not yet passed through to the street; in several others, they are below a nickel. The pressure is on for gasoline retailer recovery in many locations. Hopefully, as retailers seek recovery, they are not mistaken for Hurricane Isaac "price gougers" and attract bureaucratic hysteria.

Camarillo, Calif.-based Lundberg Survey Inc. is an independent market research company specializing in the U.S. petroleum marketing and related industries.

Click here for previous Lundberg Survey reports in CSP Daily News.