The Ups and Downs of Fall Fuel Margins

Weak October year-to-date margins promise to widen in November

By 
Samantha Oller, Senior Editor/Fuels, CSP

retail gasoline prices

ST. PETERSBURG, Fla. -- Retail fuel margins fell by more than one-third in October on a year-over-year basis, but are likely to rise again through November.

Year-over-year fuel margins narrowed 35% during October against 2014’s heftier average, according to the latest Convenience-Store Grab-N-Go research note by Raymond James & Associates, St. Petersburg, Fla. Last year saw the second-highest retail fuel margins for the month of October in a decade, helped by falling commodity costs.

This October, year-over-year decline represents a 22-cent-per-gallon (CPG) drop vs. October 2014, and a 17% decline from September 2015. Despite this fall-off, October 2015 margins actually matched the five-year average and median, Raymond James analysts noted. Their coverage area includes Casey’s General Stores, CST Brands, Murphy USA, CrossAmerica Partners, Sunoco LP and TravelCenters of America.

On a regional basis, the Southeast and Texas saw the greatest margin compression. In the Southeast, home to El Dorado, Ark.-based Murphy USA, margins fell 56% year-over-year. In Texas, where San Antonio-based CST Brands and Corpus Christi, Texas-based Sunoco have sites, margins narrowed 54%.

Nationally, margins fluctuated week by week between 18 and 31 CPG from September through October, or 20% to 50% below year-ago levels. Diesel margins fell 26% year-over-year, but still hit their third-highest October average in 10 years.

However, analysts expect margins to grow year-over-year in November as retail gasoline prices begin to dip below $2 per gallon in some parts of the country, behind an approximately 10% drop, month to date, in wholesale costs.

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