U.S. gasoline stocks are low, and demand is high, relative to recent levels. Demand is growing both seasonally and year-on-year. The raw resource, crude oil, is moving up in price at more than a crawl, due to a tightening balance between world supply and demand.
Even the United States, tracking—although not of course following—production cuts being imposed by major producers within OPEC+ as they try to realize better profits from their output, shows crude oil output has dropped.
The average retail price of regular-grade gasoline rose 3.59 cents per gallon (CPG) in the past two weeks, to $3.6732, according to the most recent Lundberg Survey of U.S. fuel markets. The moderate hike closely matches that drop in price that took place during the previous two-week period.
In these two weeks, the average wholesale price climbed 10.45 cents, thanks to refiners passing through higher oil prices they had already received into the refined product prices they charge their accounts.
That combination has reduced the average retail gasoline margin by 6.86 CPG. In the past month, retail margin has been eroded by 12.35 cents. The current average retail margin is 26.54 cents.
Note that the average retail margin includes, within the Lundberg July 21 snapshot, Seattle's elevated margin of 60.49 CPG, as well as several acutely low margins such as currently torturing the retail sector in Houston.
In the major refining center and huge metro gasoline market that is Houston, the average street price was virtually unchanged in the past two weeks, edging down 0.25 CPG to $3.099 on July 21. But the weighted wholesale price of regular grade meanwhile had climbed a big
19.37 cents. This cratered margin to less than one penny, just 0.89 cents. It had already been scant before this loss, at 20.51 CPG on July 7.
It would take a nonsensical reversal in crude oil prices to prevent a significant price hike at retail in the near future. We may see a rise of 10-15 cents on average in coming days, thanks to mounting gasoline margin pressures upon both refiners and retailers.
Click here for previous Lundberg Survey reports in CSP Daily News.
Trilby Lundberg is publisher of the Lundberg Survey of U.S. fuel markets. Lundberg Survey Inc. is based in Camarillo, California.