ST. PETERSBURG, Fla. -- May was “unremarkable” for retail gasoline margins, but truly tough for diesel.
According to the latest Convenience Store Grab-N-Go research note by Raymond James & Associates, St. Petersburg, Fla., national retail margins on regular gasoline rose 7% sequentially in May to 16 cents per gallon (CPG). While this is 12% higher year over year, it compares to May 2015, when margins were at a six-year low for the month. It is also about 3% lower than the three-year average for May retail margins.
Diesel margins, meanwhile, fell 25% year over year on a jump in distillate wholesale prices in the middle of May. This marks the lowest May average in eight years, with the slimmest gasoline/diesel margin spread since early 2014, according to Raymond James.
May and June retail margins typically rise 20% to 40% sequentially from April on higher demand and the end of the transition to summer-blend gasoline. But unfavorable wholesale-cost trends have kept retail margins below Raymond James’ modeled projection for the publicly held c-store and fuel retailers it follows. These include Casey’s General Stores, CST Brands, Murphy USA, CrossAmerica Partners, Sunoco LP and TravelCenters of America.
Yet Raymond James’ analysts are sticking to their second-quarter 2016 estimates for the group, expecting a decline in wholesale prices through much of June and better margin opportunities in the near term.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.