The average price moved up with crude, seasonal reformulation costs, plus more ethanol at higher prices, the latter two due to government requirements.
The [image-nocss] rate of change per week, approximately eight cents, is about the same as the prior two-week Lundberg surveys, and as in the same time last year.
It is not unusual for hefty hikes this time of year. But demand's poor performance is unusual, and may prove to be sustained.
U.S. average retail margin on regular grade hit its lowest level since September 12 last year, when it was briefly in the red. Due to lag time between wholesale buying price hikes (for example, a rise of 9.14 cents per gallon at branded racks in the past week alone) and the street, margin was a scant 4.25 cents per gallon on May 15. Retail price passthrough will have to conclude quickly, but in the meantime weak gasoline demand makes the pain more acute.
Rising unemployment is the poison on the bad economy's arrow aimed at the industry. The perennial climb of gasoline demand is not due to the ancient myth of summer vacation and holiday driving, but because of longer daylight hours and benign weather, our demand studies repeatedly prove; it's the job commute that is the backbone of gasoline demand, and it is ailing.
In the snapshot of May 15, retail gasoline markets' gasoline margins fall into these quartiles: miserable (in the red); poor (zero to 4.4 cents); skinny to OK (4.4 to a dime); and favorable (10-17 cents).
Hopefully, the margin picture will vastly improve in June, even if demand doesn't. At least no giant retail price hikes are on the visible horizon, which would send demand spinning down. The current pump price of $2.30 is a discount of $1.49 under last year, and demand is thankful.
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