Retail Margin Slashed

Gasoline price cutting is done, says Lundberg

CAMARILLO, Calif. -- Retail gasoline price fell another 6.77 cents per gallon during the past three weeks, to an average $3.410 for regular, according to the most recent Lundberg Survey of approximately 2,500 U.S. gas stations. Total decline since April 6 is a whopping 55.67 cents.

That huge price cut, plus the fact that the current price is at a 20 cent discount to last year's price, is an incentive to consumers. Gasoline demand is up with the summer season as always, but Lundberg data suggest it is also up year over year. Stronger demand is a price support.

Even more importantly, crude oil prices turned around and rose during the same three weeks (up $7.36 per barrel for West Texas Intermediate [WTI] crude oil, and more for Brent crude oil) and impacted wholesale gasoline.

In fact, in a few cities retail prices are already up since June 22.

Wholesale gasoline prices rose while retail fell, on a U.S. average basis. Result: The U.S. average retail margin crashed from nearly 29 cents per gallon three weeks ago to a seriously skinny 8.8 cents. The July 13 snapshot shows margins in red ink in some locations.

Recovery must, of course, be sought.
Unless crude prices decide to crash again, we've come to the end of the retail gasoline price cutting; however, near term pump price stability looks more likely than a spike.

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.