The July 7 national average retail price of regular-grade gasoline is $3.6373, and is a decline of 3.94 cents per gallon (CPG) from two weeks prior, according to the most recent Lundberg Survey of U.S. fuel markets. It happens to be, to nearly the hundredth of a penny, the amount of increases that took place during the prior five-week period.
But now, there's good reason to expect that retail prices will resume their early climb. It could be impressive. Oil prices strengthened, with West Texas Intermediate rising $4.70 per barrel since June 23 and half of that happened just on July 7. Wholesale gasoline prices will be hit, then retail. WTI closed at $73.86 per barrel, a price that some key producers, notably Saudi Arabia, likely see as lolling in the doldrums and that needs robust lifting, and fast.
In addition, the U.S. gasoline market has moved to a tighter supply-demand balance with gasoline stocks down and demand up. Even U.S. refiners, champions of good performance with high use rates of aggregate capacity, are showing the strain with some capacity idled for repairs. The latest capacity utilization rate has dropped to 91.1%, 4.7 percentage points below what it was four weeks ago.
Among the myriad factors competing to determine retail price direction, right now the ups have the stronger pull.
During the June 23-July 7 period, the U.S. downstream weakened in terms of gasoline margin. In the case of the retail sector, margin was trimmed by 5.49 cents, to 33.39 cents. Tax (combining federal, state, local) took another bit, 0.81 cents, and now totals 61.86 CPG on average.
Philadelphia sits among the low margin markets at 23.10 cents, and among the high gasoline tax markets at 80.99 cents. Retailers here gained a penny of margin as retail rose more than did wholesale, at least on regular grade. Philadelphia retailers lost 1.64 CPG on premium grade margin.
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.