CAMARILLO, Calif. -- The August 9 U.S. average price of regular grade gasoline dropped 7.61 cents per gallon in the past two weeks, to $3.5985, virtually reversing the 8.38 cents rise of the prior two weeks, according to the most recent Lundberg Survey of approximately 2,500 U.S. gas stations. The price decline comes mostly from a reduction in U.S. refiner margin on gasoline.
Crude oil prices weren't a major factor; in fact, they rose a little in the same two weeks, in part from a weaker dollar.
It was very heavy U.S. refiner gasoline production and wholesale gasoline price cutting to marketers and retailers that allowed for the retail price cut. The U.S. capacity use rate and overall gasoline supply are newsworthy events, and they are key to the consumer benefit of paying nine cents per gallon less at the pump versus the year-ago point.
An added input to refiners' wholesale price slashing is the now lower prices for Renewable Identification Numbers (RINs) that obligated parties must purchase if they would otherwise be out of compliance with the U.S. Environmental Protection Agency (EPA) sales diktat.
Refiner margin on gasoline shrank some 15.5 cents per gallon, while retailer margin on gasoline expanded by a nickel since late July. Retail margin has now recovered to exceed 22 cents on regular. Year to date, it is very close that that of full-year 2012.
If crude oil prices remain approximately where they are now, there may be a few more pennies of retail gasoline price cutting in the pipeline. Not a deep plunge, though, because refiners have already seen their gasoline margins plunge.
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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