Pump Prices Plummeting With Crude
Gasoline down 34 cents, diesel down 31 cents, says Lundberg
CAMARILLO, Calif. -- At the pumps, both gasoline and diesel prices peaked in early April and have been falling ever since. In the past nine weeks, regular grade gasoline is down 34 cents per gallon and diesel is down 31 cents, according to the most recent Lundberg Survey of approximately 2,500 U.S. gas stations. In the three weeks since May 18, gasoline dropped 15.9 cents to $3.6243 and diesel fell 17.64 cents to $3.9089.
Each of our two main transportation fuels is priced at a discount to a year ago: gasoline 11.62 cents under that of June 10, 2011, and diesel 13.65 cents under.
Gasoline and diesel motorists and consumers in general due to the role of diesel fuel in the delivery of goods have the double benefits of falling prices and price discounts under last year--a favorable change at a time when deep underemployment persists.
Crude delivered these price benefits: West Texas Intermediate (WTI) crude dropped $7.38 per barrel during the past three weeks, or 17.57 cents per gallon equivalent. The main reason that the crude oil drops and those of gasoline and diesel are virtually identical is that most of the oil price drops came during the last week of May, after which they have been comparatively stable so that refiners' cuts to wholesalers are a visible pass-through.
Refiner margin on gasoline is healthy by most measures. Retail margin on gasoline is healthy in most U.S. markets, and fabulous in some. Nationally, retail margin lost 0.27 cents and sits momentarily at an impressive 18.63 cents on regular grade.
In most of the country, wholesale price cuts have passed into retail, but there is more street price cutting to come, mostly out West where wholesale price cuts are still making their way to the street. There, due to the Cherry Point, Wash., refinery roaring back onstream, unbranded racks fell off a cliff. Branded racks are following at some distance with dealer buying prices behind them. As always, what retailers' local competition is doing is the other key to how retailers price, along with what wholesale buying prices are doing.
A Washington senator is calling for a Federal Trade Commission (FTC) witch hunt just as retailers, jobbers and dealers are getting their bearings and adjusting their streets (see Related Content below for previous CSP Daily News coverage).
Unfortunately, nationwide as well as in the state of Washington, consumer "advocates" fail to respect that a fair price is the price the market will bear at a given time, and that a decent margin allows for the successful fulfillment of demand.
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.