Pump Price Makes Biggest 2012 Jump

Lundberg on crude, corn, other issues

CAMARILLO, Calif. -- Between July 27 and August 10, the U.S. average retail price of regular grade gasoline leaped 18.38 cents per gallon, the biggest two-week jump so far this year, according to the most recent Lundberg Survey of approximately 2,500 U.S. gas stations. This lands the price 7.86 cents per gallon above its year-ago level.

The current price, however, remains a bargain, nearly 28-cents-per-gallon worth, compared to this year's high in early April.

Right now, gasoline carries the combined burdens of higher crude oil prices, higher ethanol prices and market response to various refinery and pipeline issues taking place in various regions.

Brent crude rose even more than West Texas Intermediate (WTI) crude, in part because it is more sensitive to Iranian oil destinations shifting from Europe to Asia. The drought brought the corn price spike that translated to gasoline by way of the federal ethanol sales mandate. As for refinery/pipeline issues, some are already resolved and others are in play. Those not yet normalized will reflect not only repair time but multiple agency inspection processes, the durations of which will impact the gasoline market as well.

U.S. refinery run rates are impressively high and there is no shortage of finished product, just as there is no shortage of crude oil. Barring a big supply event for either crude or gasoline, retail gasoline prices are unlikely to rise much more, if at all.

Meanwhile, refiner margin on gasoline swelled in these two weeks while retailer margin on gasoline fell by more than half. The former will likely forfeit some soon while the latter will likely gain. A retail margin of a bare 5.53 cents on regular, which is the August 10 U.S.

average, is crushingly unsustainable.

Camarillo, Calif.-based Lundberg Survey Inc. is an independent market research company specializing in the U.S. petroleum marketing and related industries.

Click here for previous Lundberg Survey reports in CSP Daily News.