Pump Price Drops

Lundberg: Refiners shield retailers, consumers … for now

CAMARILLO, Calif. -- Regular grade retail gasoline prices dropped 3.82 cents in the past two weeks, to a U.S. average $3.4289 per gallon, according to the most recent Lundberg Survey of approximately 2,500 U.S. gas stations.

During the same period, crude oil prices rose. But refiners failed to pass through into wholesale gasoline the hikes they received, thanks mostly to declining gasoline demand. Refiner margin on gasoline shrank dramatically.

Retail gasoline margin also shrank, although by a much smaller amount.

Both sectors are under pressure to attempt gasoline margin recovery. If oil prices continue climbing, we will see it at the pump.

Oil price hikes aren't assured, especially with Libyan exports returning; however, if Libyan output restoration creates downward pressure on crude, then other OPEC producers, whose spigots were opened wider to help fill the Libya gap, may respond with output cuts.

Whatever crude oil does next, gasoline prices will be lower than they otherwise would be under more favorable economic conditions--because the work commute is the chief creator of gasoline demand, and demand is maimed.

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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