Industry Margins Plump at Pump Price $3.11

Lundberg: At moment, refiners, retailers have healthy gas margins on average

CAMARILLO, Calif. -- The U.S. average regular grade gasoline price rose 2.99 cents in the past two weeks, to $3.1111, according to the most recent Lundberg Survey of approximately 2,500 U.S. gas stations. The rate of increase has slowed by half. In fact, prices rose less than a penny or even slipped slightly in some cities.

The three cents is approximately the same amount that crude oil (benchmark NYMEX) rose during the same two weeks. But the three cents were not pocketed by refiners; refiners' margin on gasoline [image-nocss] fell by about three cents, while retailers' margin on gasoline gained that amount.

At the moment, both refiners and retailers have healthy gasoline margins on average (about 38 cents per gallon and 14 cents per gallon, respectively) in terms of recent history. (On January 21, retail margins on regular around the country fall in these approximate quartiles: 3-10 cents; 11-15 cents; 15-18 cents; and 18-21 cents.) Since gasoline demand has reawakened to some modest growth, one may infer that the end-user price of $3.11 is right.

Crude oil will continue to dictate what gasoline prices do, even more obviously than usual because of the gasoline glut. Oil increased $1.08 per barrel during the past two weeks, as the further weakening of the dollar met with some world demand recovery. Short term, if oil prices show little change, so will gasoline. In our lowest demand month of the year, we are weeks away from lower vapor pressure regulations adding to cost and spring demand soaking up some of the glut.