CAMARILLO, Calif. -- In the past two weeks, the U.S. average retail gasoline price dropped 8.9 cents per gallon to $3.3741, according to the most recent Lundberg Survey of approximately 2,500 U.S. gas stations. It has been 13 weeks of pump price declines, totaling 33.57 cents since June 20.
This is the lowest average price since early February. It sits nearly 15 cents under the year-ago point.
Crude oil recently got more help driving gasoline prices lower. Since June 20, it is mainly lower oil prices that powered the decline, but the past two weeks added two more elements. Although crude oil prices fell again, U.S. gasoline market elements dovetailed in and added impetus to the street price plunge.
First, as expected, the mid-September shift by refiners to lower-cost winter blend product in most markets is underway, and second, ethanol, whose prices had already been falling, stepped in with a true price crash. These two gasoline blending events are still unfolding in the market with probably a few more cents per gallon decline coming to the pump. The cost cuts will be visible in more retail price cuts unless crude oil prices leap back up quickly.
Meanwhile, U.S. gasoline supply and demand appear in favor of more retail price cutting near term, as both ample stocks and a high refining capacity use rate meet with lackluster demand. Seasonal maintenance and other repairs notwithstanding, U.S. refiners in the past month have been cranking out product using more than 93% of total capacity.
In the past two weeks there has been a transfer of wealth in gasoline margin: refiner loss, retailer gain. Refiners lost gasoline margin ground as they slashed wholesale prices, aided by seasonally lower production cost and the cheap ethanol bonanza. Retailers, though, added 1.97 cents per gallon to their average regular grade margin, which now sits at a historically comfy 19.08 cents.
Year to date nationally, regular grade retail margin is 14.83 cents, wider than any calendar year going back to excellent 2008, when it was just two hundredths of one penny better.
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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