CAMARILLO, Calif. -- The U.S. average regular grade gasoline price is $2.9423, down 3.46 cents from two weeks ago and 12.89 cents from four weeks ago, according to the most recentLundberg Survey of approximately 7,000 U.S. gas stations. Consumers and refiners combined are now soaking up a relative glut, cutting the rate of recent retail price decline by about two-thirds.
Consumers are doing this by entering their normal seasonal demand uptick after January (the lowest demand month), which was higher than last January's, as friendlier [image-nocss] weather and more daylight hours will allow.
Several refiners, meanwhile, cut back on crude runs due to poor margins, concentrating instead on pre-Spring repair and maintenance, getting two birds with that stone. Soon, domestic gasoline output will have to increase toward its Spring push and Summer maximization.
The latest retail price decline comes fully from contractions in refiner and—to a lesser degree—retailer margins. Retail margin, some 13.5 cents year-to-date for regular gasoline, sits decidedly above last year's average, while refiner margin is a grim fraction of its 2007 average.
Dreary news stories suggest that great consumer misery, for which there is a credibility gap, is hurting gasoline demand, when demand actually grew last month per government data. As gasoline demand perks up with the seasonal demand curve over coming weeks, assuming no big oil price retreat from the approximate $90 price for light grade that has prevailed over the past month, refiner margin should recover and street prices should rise.
Barring any important crude or gasoline supply problem, all three parties—refiners, retailers and motorists—will benefit from current developments.
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