Pooled gasoline margins (all three grades weighted by their market shares) on April 10 averaged 8.8 cents per gallon, according to the most recentLundberg [image-nocss] Survey of approximately 7,000 U.S. gas stations, while the annual pooled margins for 2008 average 15.5 cents per gallon.
However, Lundberg says it's too early to proclaim that the sky is falling. "If 2009 events unfold similar to many prior years, calendar year average retail margin will be substantially higher than it is now," she said. "It is compelling to see current low retail margin as foreboding; but it would be simplistic and fly in the face of historical performance."
In fact, Lundberg points out, on April 18, 2008, U.S. average pooled retail margin was just 6.6 cents gallon. "Certainly skimpier than right now," she said.
She added, "Our work with margin data shows that comparing them week to week or quarter to quarter usually does not reveal a meaningful trend. Annual comparison, however, does."
NACS State of the Industry data shows convenience stores averaged 18 cents per gallon in 2008, compared to 14.6 cents the previous year. And Lundberg pointed out that margins can vary greatly from region to region.
According to the Lundberg Survey, 2008 average regular-grade gasoline regionally margins broke down like this:
Midwest: 12.2 cents per gallon (CPG). Rockies: 14.0 CPG. East Coast: 15.0 CPG. West Coast: 15.7 CPG. Gulf Coast: 18.6 CPG. Lundberg also said that a bright spot in all of this is the fact that in first quarter of 2009, gasoline demand grew 0.6%. "This is good news, especially in light of government predictions of further shrinkage for this year following last year's drop," she said.
Meanwhile, the April 10 retail price of regular grade is $2.0481, up 9.58 cents from March 20, according the Lundberg Survey's most recent data. In these three weeks, crude oil price moves were small, but gasoline demand was active.
Seasonally, it is climbing as it always does. And as always since 1989, vapor pressure reductions kick in per regulations that vary by location and by month. This, combined with the growth in ethanol use by refiners required by federal law, adds cost to the price of gasoline coinciding with public need of more supply. Additionally, year-on-year gasoline demand is either on the rise or flat, depending on the time period and method of measurement.
One thing for sure, she wrote, the fact that the current retail price is a discount of $1.2690 under the April 18, 2008 price is an encouragement for demand which remains weak due to the economy.
Assuming no crude oil or gasoline supply problems, gasoline prices are on track to continue rising as we approach our three-month high demand period but nonetheless will remain a discernible discount under 2008 levels. It's also likely that during the price climb there will be room for industry margin improvements. The benefits of better margins and still-low retail prices would then help all three of the big stakeholders in the downstream portion of the petroleum business: refiners, marketers, and motorists.
The average weekly retail hike of the past three weeks of about three pennies could well be the trend for a while, Lundberg reported.
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