CAMARILLO, Calif. — The U.S. average retail price of regular-grade gasoline dropped 3.05 cents per gallon (CPG) in the past two weeks, to $2.1913, , according to the most recent Lundberg Survey of U.S. fuel markets. During eight weeks of decline, it is down 7.08 cents. While still moderate considering the puncture job the pandemic put on petroleum consumption, the price cutting has accelerated and may become steeper in coming weeks.
Crude oil prices declined notably in these two weeks, and no firm turnaround to the upside appears on the near horizon. Libya's ongoing production recovery is an important reason. Petroleum demand in general is suffering new setbacks as several governments reinstate varying degrees of lockdown for fear of the pandemic.
U.S. gasoline supply is still glutted, and now demand is suffering more than it ordinarily would within the seasonal curve. Many schools are still closed, and some economic activities are repressed due to COVID-19. A delayed execution of another "stimulus" deal, the shift to Daylight Saving Time, continued underemployment and the Thanksgiving holiday, for those consumers who are able to afford spending on road trips for it, pauses demand too because motorists idle their vehicles upon reaching their destinations.
If Libya's push for more production normalization succeeds, and OPEC eschews or delays its partial removal of production cuts slated for January, and if the U.S. gasoline market remains in its seriously injured state from demand destruction, then this retail gasoline price slide may well continue into 2021.
Meanwhile, downstream margins on gasoline are hanging in there: In the past two weeks, U.S. refiners kept a moderate chunk of the oil price drop for themselves, and retailers forfeited just under one penny. Both these gasoline margins are at historically respectable levels, even though both sectors are plagued by weak sales.
The dramatic retail price discount of 50 CPG under the year-ago price would normally spark enthusiastic consumption—but not these days.
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Trilby Lundberg is publisher of the Lundberg Survey of U.S. fuel markets. Lundberg Survey Inc. is based in Camarillo, Calif.