CAMARILLO, Calif. -- The U.S. average retail price of regular grade gasoline jumped 24.75 cents per gallon over the past two weeks, to $3.5918, according to the most recent Lundberg Survey of approximately 2,500 U.S. gas stations. The price change is the largest two-week hike since late February-early March of 2011.
The current price is 8.17 cents above the year-ago point.
Since bottoming out seven weeks ago, the price is up 33.39 cents.
Some of the two-week rise comes from still-high oil prices with some international grades up again. Also several U.S. refineries are operating at partial rates of capacity, as planned and unplanned maintenance and repairs are completed ahead of the high gasoline demand season to come. There is no gasoline shortage though: The overall U.S. use-rate of capacity is above what it was last year at this time, and gasoline stocks are robust.
Some press reports have since the end of January blamed the price rise on the switch to summer blend specs, but they are wrong as even in California this has yet to take place. But the government-scheduled switch in California and some other areas will begin soon, adding cost from lowering vapor pressure to the cost of making a gallon. If crude oil prices drop, that higher cost will still be there, but may not be visible in price.
Refiners recovered much needed margin on gasoline in these two weeks, but retailers did not. Instead, the wholesale price hikes accelerated, leaving retailers' average apparent margin twisting in the wind at scarcely eight cents per gallon on regular, same as it was two weeks ago. It looks to be retailers' turn to get well now. This alone is enough to bring another few cents' price increase at the pump over coming days.
Several markets showed negative gasoline margins in the Lundberg snapshot of Feb. 8, and in a few, diesel margins were in the red, a rarity. Unfortunately, if street prices continue climbing, few reporters and commentators will speak the name of the legitimate cause, which will be healthier, higher retail gasoline margins--and instead misinterpret the gasoline market.
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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