Fuels

Gasoline Price Trend: Still Up

Lundberg: Price crash supporting demand = 6-cent hike
CAMARILLO, Calif. -- The February 6 average retail price for regular grade is $2.9188 per gallon, up 6.36 cents since January 23. Since the price bottomed out seven weeks ago, it has climbed nearly 26 cents per gallon, according to the most recentLundberg Survey. The first 20 cents were mostly from crude oil prices climbing out of their own trough, with a lessening of the severity of demand shrinkage as second factor. But this latest six cents rise echoes gasoline demand recovery. Demand is still down, but is within calling [image-nocss] distance of its year-ago level, cleaning up some of the surplus supply.

To put the current retail price in perspective: The all-time record high on July 11 was $2.19 higher; the February 8, 2008, price was $2.02 higher. The low price environment continues, encouraging demand.

Many retailers have yet to pass on stronger wholesale prices, so margin on average was thinner than a nickel on February 6, and negative in several markets; it will have to expand shortly. It would take dramatically higher crude oil prices, not likely in the short term, to hike retail enough to plunge demand back into its late 2008 despair.

Despite some interpretations to the contrary, gasoline demand's signs of returning life is good news for consumers: They are able, thanks to last year's deep price crash, to edge their use back up at least toward the level of this time last year, despite otherwise poor economic conditions. To see it as bad news is to condone curtailment of economic activity.

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