That trend continued into April, with refiner margins shrinking against a 3.79-cent increase in the U.S. average retail price of regular-grade gasoline over the past three weeks and a dime jump in the same time period [image-nocss] in the price of crude.
Retailers gained margin on average "for the moment," according to Trilby Lundberg, who heads up the Lundberg Survey. "If crude remains at around $85 a barrel, the missing passthrough by refiners will probably appear soon."
The average street price was $2.8520, according to the most recentLundberg Survey of approximately 5,000 U.S. gas stations.
Greg Salverson, director of global business solutions, FuelQuest Inc., Houston, told CSP Daily News that he predicts prices staying in the $2.70-$2.90 range coming into the traveling season, with maybe $3 for parts of the United States.
He did foresee retail margins eventually becoming tougher or "reverting to 2006 [timeframes] and before 13-15 cents per gallon."
Salverson had a more upbeat take on refinery margins, agreeing with Lundberg that the situation will improve, but asserting that refinery margins have been getting better due in part to supply holdups for spring turnarounds.
"We're not back to being healthy and profitable," he said. "They're still getting killed, but compared to how [refiners] were getting killed last year, there is improvement. And hopefully, it'll continue to show modest improvement in the immediate future."
U.S. refiners are forced to do a "high-wire act," according to Lundberg. Officials said if refineries run too much crude and raise capacity-use rates, "their inferior gasoline margins can worsen. If they run even a bit too little, then wholesale-price recovery will effectively hand more sales to their foreign competitors."
Either way, Lundberg said, mothballed capacity and imported gasoline would step in quickly, causing prices to peak. In addition, they said the flood of ethanol, which is currently cheap, is holding wholesale prices lower than they otherwise would be "and depriving refiners of gasoline sales in bad economic times."
With low demand and a supply glut persisting, Lundberg said that the price of crude will be the driving factor. "If in the coming weeks, retail gasoline climbs 15 cents to reach the much discussed $3 mark, it is much more likely to be even higher oil prices than strong gasoline demand that would cause it."
For more on how refinery losses and shut downs may affect fuel pricing along the supply chain, look to the April issue of CSP magazine.
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