The current price is a crossroads for gasoline demand. For the first time this year, the current price is above its year ago level.
Throughout 2009, current retail [image-nocss] prices were much lower than 12 months earlier. In early July, the discount reached $1.56 per gallon (July 10, 2009, at $2.5573, under July 11, 2008, at $4.1124). It shrank quite steadily from there as 2008's price crash (deepest, fastest in history) culminated, so that by October 23 this year motorists paid just 12 cents per gallon less than they had on October 24, 2008. The November 6, 2009, price is nearly 39 cents per gallon above that of November 7, 2008.
Motorists hurt by the poor economy had, until now, a benefit in that year-ago discount. Now, with even fewer of them employed (the un- and under-employed having grown to a total 17.5% of the population), the current price feels high indeed. With this, gasoline demand growth, already nil, can be expected to bleed red.
The current price is the highest in 2009, and if crude oil prices allow, may prove to be the peak.
The small retail price up-tick of the past two weeks was accompanied by a bounce in retail margin (all wholesale classes of trade weighted) out of October's pit back to health on average. Behind the average are dramatic differences: loosely one-third of markets showed better than 15 cents on November 6; about a third had 10 to 15 cents; and the rest had less than a dime (some with negative margins on that date). Refining margin on gasoline regained just a little, not enough to beckon about one-fifth of U.S. capacity back into action.
Bad times for gasoline consumers, made more bitter by the loss of the year-ago discount, is affecting the whole gasoline business communitywith worsening unemployment ensuring that retailers' non-gasoline sales and refiners' sales of all their crude oil derivatives share the pain.
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