CAMARILLO, Calif. -- The U.S. retail price of regular grade gasoline dropped 5.89 cents in the past two weeks, to $3.5206 per gallon, according to the most recent Lundberg Survey of approximately 2,500 U.S. gas stations. The prior two-week drop had been just over 9 cents.
This makes a total seven-week pump price decline of 18.92 cents. The price may drop further from here, but likely a smaller amount, if any.
Lower crude oil prices are the chief cause of the drop. Trailing in importance but making a contribution is lower ethanol prices.
Moderate hikes in oil output from some OPEC countries offset some output slips in other exporting nations, and North American producers continued strong. A belief that central bank money-printing may taper significantly may have added some impetus to oil price declines.
For now, as oil price cuts have worked their way through wholesale and retail gasoline markets, if oil price moves are not extreme, a resumption of more stable pump prices is a possibility. Recent days saw Midwest unbranded rack price hikes averaging more than a dime, with branded following closely, emanating from refining issues in the region.
If these are of short duration, then retail gasoline price direction will copy oil price direction.
Since July 25, refiners regained part of their earlier gasoline margin loss, while retailers gave up nearly a nickel margin. Each may be seen as within "living wage," but each is below the respective gasoline margin of one month ago.
Crude will dictate much of what happens next. If Libya's recent output gains are reversed again, or if insecurity Iraq worsens, then this will likely prove the end of the pump price decline.
Camarillo, Calif.-based Lundberg Survey Inc. is an independent market research company specializing in the U.S. petroleum marketing and related industries.
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