CAMARILLO, Calif. -- During the two weeks between Nov. 4 and Nov. 18, retail gasoline prices dropped 4.82 cents, to $3.8807 per gallon. During the past four weeks, the price is down 8.64 cents, according to the most recent Lundberg Survey (www.lundbergsurvey.com) of approximately 2,500 U.S. gas stations.
This decline comes despite the common U.S. benchmark oil, West Texas Intermediate (WTI), strengthening by $3.15 per barrel (near-month closing price) between those two days. Another benchmark, Brent crude, more realistic right now because WTI supply has been glutted, fell $4.41 per barrel. WTI's rise was the equivalent of 7.5 cents per gallon, while Brent's drop was the equivalent of 10.5 cents per gallon.
One reason WTI could rise is the expected reversal of the Seaway pipeline, to move crude out of WTI's Oklahoma delivery point to the U.S. Gulf, soaking up the glut. One reason Brent could fall is the comeback of Libya's oil, a cousin to Brent as to quality.
Gasoline followed Brent's price decline and also U.S. gasoline demand's decline. Demand destruction from acute underemployment continues and there is no return to healthy demand visible on the near horizon. On top of the ongoing shrinkage of gasoline demand was the end of Daylight Saving Time on Nov. 5, as people drive less in the dark (and stormy) nights.
Next up, gasoline will do as oil (but not necessarily WTI) dictates, as crude will be responding to changes in Libya's continued comeback and in petro-politics and demand trends anywhere in the world. If the Brent price moves little, gasoline prices are likely to do the same.
For now, retail margin is happy, very happy at 22.21 on regular grade. Wholesale prices dropped far more than retail did during the two-week period. Weighted by class of trade nationally, wholesale plunged more than 13 cents per gallon over two weeks, allowing about 8.4 cents per gallon expansion for retail margin--which may prove fleeting.
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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