Retail Margin Recovers
Small U.S. price cut masks giant regional swings, says Lundberg
CAMARILLO, Calif. -- The U.S. average price at the pump for regular grade gasoline slipped 4.16 cents per gallon in the past two weeks, to $3.5969 per gallon, according to the most recent Lundberg Survey of approximately 2,500 U.S. gas stations. This price is above the year-ago point by 12 cents.
This modest decline more or less reflects what crude oil prices did during the same two weeks. Downstream margins aided that, as refining margin on gasoline fell, while retailer margin on gasoline rose, generally offsetting one another.
Behind that mere four-cent drop at retail are gigantic variations. As some refining capacities in the Midwest, for example, came back up with project completions, retail prices plunged--while capacities in California were crimped with fresh glitches so prices surged. The average California pump price is up about nine cents since June 7, with Los Angeles and San Diego both up more than 13 cents. Meanwhile Chicago's average dropped 25 cents and some smaller markets crashed even more.
Retail margin overall suddenly expanded to 21.63 cents after weeks of deprivation. Some markets continue with very skinny margins, while several Midwest are extremely flush, at least for the moment. If crude oil prices should hold approximately steady near term, then retail gasoline prices are likely to follow suit, or decline a bit further if retailers push through more wholesale price cuts to the street.
Camarillo, Calif.-based Lundberg Survey Inc. is an independent market research company specializing in the U.S. petroleum marketing and related industries.