During the same two weeks, crude gained $5.75 per barrel, closing at $71.77. Retail fell anyway, because the downstream half of the business lost margin in the period, and despite price recovery for ethanol. Oil remains within its normal range of recent [image-nocss] months. If it does not suddenly climb, gasoline prices will probably continue to slip.
Demanddespite recent growth vis a vis the same time last year when demand was plummetingwon't be recovering anytime soon, thanks to the still growing number of unemployed and underemployed, and to seasonal demand softening.
Currently, the retail price discount under the year-ago level is 83 cents, down from $1.14 two weeks ago, because of the fact that last fall, prices were in extreme crash mode. The shrinkage of the discount, somewhere in the consumer consciousness, will make a contribution to demand drag. Next month, the seasonality of demand will be accentuated by the ending of Daylight Saving Time.
Since September 25, retailers have lost more than half their operating margin and will be pressed to seek some recovery. In retailers' case, the growing number of unemployed hits in-store sales as well.
Refiners lost several cents' gasoline margin, too, but their position is becoming truly direwith even more idled capacity of late, they are at risk of outright closure. The sour economy, ethanol's encroachment and near certainty of foreign suppliers' swelling share of the U.S. gasoline market spell trouble for the country's domestic refining strength.
Sunoco's shuttering its Eagle Point refinery in Westville, N.J., and Valero's job slashing at its Paulsboro, N.J., refinery are foreboding signs of the times. Refiners are now adding to the unemployment that ordered their under-use of capacity in the first place.
Refiners and marketers can look forward to Spring 2010 when seasonal demand growth springs hope for better business conditions.
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