Even the U.S. [image-nocss] average tax fell by nearly a penny from the role that sales taxes, where they exist, play in final consumer price.
Retail diesel fell 26 cents in the past two weeks, to $2.9268, and this is the first national price below $3/gallon in more than a year, Lundberg said.
Three big factors are at work to determine gasoline's price trend: crude, demand, and margin.
Gasoline has followed crude, overwhelmingly the main price determinant of petroleum product prices. The U.S. light benchmark grade closed at below $50 a barrel on the day of Lundberg's national retail update, nearly two-thirds below its brief perch this past summer. During several recent months, severely dampened world oil demand growth caused the oil price to plummet.
In the U.S. gasoline market, the weaker economy, with fewer motorists due to reduced employment, has replaced high prices as the main cause of demand shrinkage. At $1.97/gallon for regular, demand is showing signs of life-that is, the shrinkage is less pronounced.
Margin, at retail, remains swollen because retail price cuts have not caught up with reductions in wholesale buying prices. Only a handful of metro area retail margins on regular are less than 20 cents. Just two are in single-digits. Nearly half the metro markets surveyed on Nov. 21 are wider than 30 cents.
Margin on gasoline at the refining level, meanwhile, is so thin that a dramatic expansion is due. Further shutting of U.S. gasoline production capacity may occur.
Lundberg data indicate that on Nov. 21, refining margin on gasoline is just one-fourth the width of retail margin. The annual average so far this year has refining margin on gasoline inferior to those of the prior five years. In contrast, regular grade retail margin so far in 2008 is superior to any on record in Lundberg's nearly five decades of surveys.
If crude oil prices do not leap or plummet near term but instead hover around $50.barrel, retail gasoline will stabilize, as up correction in refiner margin and down correction in retail margin largely offset each other.
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