The rate of decline slowed as some of oil's rise moved through the system. There are 10 to 15 cents per gallon remaining [image-nocss] that refiners, marketers and retailers did not pass through.
Instead, downstreamers' margins shrank. Refiners have the double hit of lower margins and reduced operations. Retailers had a very dramatic margin loss, from a previously inflated 23 cents per gallon on regular grade on July 10 to a poor 7 centsnearly as bad as the too-skinny month of May.
The downstream shielded consumers from the oil price increase, and then some. From here, unless crude oil prices drop deeply, downstream margin recovery alone will mean the end of retail price cuts and the beginning of a rise.
The wide-view lens reveals historically acceptable year-to-date margins, and a year-to-date retail price $1.04 below the 2008 average, a seemingly benign big picture for both consumers and suppliers. But with drumbeating at federal and state levels for higher gasoline taxes intensifying and the likelihood of 2009 gasoline demand shrinkage, it may turn unfavorable for all.
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