CAMARILLO, Calif. -- The average price of regular-grade gasoline fell to the lowest level since May 15, 2009, dropping 24.68 cents in the two weeks ended Dec. 19 to $2.4713 a gallon, according to the most recent Lundberg Survey of approximately 2,500 U.S. gas stations.
The price has crashed $1.25 since May 2, this year's peak price. This current price is below its year-ago point by 79 cents. The low price is stimulating demand. More volume with good margins is cause for retail celebration.
On Dec. 19 margin was an extraordinary 33.87 cents per gallon--the gain from two weeks ago was 4.65 cents. On Nov. 21, wholesale was still crashing, but margins gained 3.35 cents up to 22.47 cents. Then on Dec. 5, wholesale crashes huge--nearly 10 cents--and margin again expanded by 6.75 cents.
That didn't end the margin bonanza, despite the pressure for sales to cut price on the street, but somehow in this latest survey, between Dec. 5 and Dec. 19, wholesale is down 29.02 cents per gallon. Unbranded rack was just plummeting, and branded rack and DTW, as well. In these two weeks, wholesale plunged just over 29 cents, and again retailers managed to eke out a margin increase of 4.65 cents.
The annual average margin for regular grade for 2014 is 17.94 cents per gallon, an all-time-high record retail margin.
It's understandable that retailers won't be crowing about this great margin because of the negative attention that they receive when they are doing well--and lack of sympathy when they are not, as businesses are always supposed to sacrifice for "social justice"--but it is a great accomplishment.
Gasoline retailers' costs are mounting. Margin has to cover all fixed and variable costs of doing business. And it must provide some kind of profit to upgrade, improve and expand.
Camarillo, Calif.-based Lundberg Survey Inc. is an independent market research company specializing in the U.S. petroleum marketing and related industries.
Click here for previous Lundberg Survey reports in CSP Daily News.
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