CAMARILLO, Calif. -- Between June 20 and July 11, the U.S. average regular grade price moved up a tiny 1.52 cents per gallon, according to the most recentLundberg Survey of approximately 7,000 U.S. gas stations. This is the smallest price change Lundberg Survey has shown so far this year. This while the near-month WTI futures price closed $10.46 per barrel higher, at $145.08, during the same three-week period.
This was possible because during the three weeks, refiner and retailer margins on gasoline crashed. Lower retail margin [image-nocss] is partly due to lag time, so some amount of quick recovery is likely. Refiners are far worse off, having given up another 11 cents per gallon on gasoline when their margin was already too thin.
Lately, the downstream half of the oil business has sacrificed itself for motorists, while the upstream half prospered well. But this margin pressure can't be sustained for long without interruptions in downstream operations. It would take a drop in the price of oil of about $10 per barrel, back to its approximate mid-June level, for the U.S. average price to not rise from here, from partial refiner and retailer margin recovery.
As always, price change and demand trends varied around the country. Biggest state consumer California is a dramatic case: The average retail regular grade price fell nearly nine cents in these three weeks. Around the country, about one-third of markets had lower average retail regular grade prices than three weeks ago; about a third had hikes ranging between five and 13 cents; and the rest had small price increases. July 11 retail regular grade margins were also loosely in three groups: less than a nickel; between five and 10 cents; and above (well above, in many locations) a dime.
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