ST. PETERSBURG, FLA. -- Retail fuel margins jumped to the highest point in a decade this past February, thanks to volatile wholesale prices.
According to the latest Convenience Store Grab-N-Go research note by Raymond James & Associates, St. Petersburg, Fla., retail margins rose 80% year over year in February, a month that has historically generated the slimmest fuel profits of the year. Margins averaged about 20 cents per gallon (CPG), which is 50% above the three-year average.
“Favorable volatility” in wholesale prices in the first three weeks of February—including a 20-CPG drop in the first week—gave retailers an opportunity to expand margins. On a regional basis, the West saw the biggest year-over-year gains on retail margins, tripling levels from February 2015. Retailers in the Southeast and Texas doubled their margins from a year ago, while those in the Northeast and Midwest saw about a 60% increase.
(Raymond James’ coverage area includes Casey’s General Stores, CST Brands, Murphy USA, CrossAmerica Partners, Sunoco LP and TravelCenters of America.)
Diesel margins, meanwhile, came close to record levels, up 45% compared to three-year averages, or up 16% year over year.
March, however, is proving to be a leaner month thanks to rising wholesale prices. On a national basis, retailers in the second week of March posted the lowest weekly margin in the past three years, said Raymond James. Year over year, margins were halved as wholesale prices jumped 35 CPG from late February. Regionally, Texas saw a seven-year low in margins, or less than 4 CPG, falling below breakeven-profit levels. Many Texas cities—Austin, Houston and Dallas—had among the lowest retail fuel profits in the United States.
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