CAMARILLO, Calif. — The national average retail price of regular grade gasoline fell 12.57 cents per gallon (CPG) in the past two weeks, to $3.9707, according to the most recent Lundberg Survey of U.S. fuel markets. While that is by no means a small cut, it pales in comparison with the drop during the prior two weeks period which was 44.84 cents.
The street price has been falling for 11 weeks: It was $5.0990 at the peak on June 10, and the total decline is a whopping $1.1283 per gallon.
Slightly lower crude oil prices during these two weeks made a bit of contribution, but a more powerful pull is weak gasoline demand. And there is no gasoline supply glut; stocks are skinny. Refiners and retailers have been cutting price aggressively to chase sales. So aggressively that refiners’ gasoline margins were slashed.
In the case of gasoline retailers, the weighted wholesale price took a 12.7-CPG step down, and average tax slipped a tad, and the nation’s retailers passed through most of that, but not quite all—benefiting the average regular grade margin by 0.27 CPG in the past two weeks.
Margin is currently 42.01 cents. There is not much fat that can be trimmed, considering the high and rising costs of doing retail fuel business. Retail margin is a far cry from the heady period of late June through late July, but is it a marked relief from the too-narrow margin period of late April through early July.
If oil prices bounce soundly higher from here, wholesale and retail gasoline price cutting would likely be further slowed or stopped soon. But weak demand’s burden on price will keep prices lower than they otherwise would be, because of the long punishment of high street prices and more recently with acute overall inflation. The higher allowable vapor pressure season, to begin mid-September, will make a little contribution to lower gasoline cost. It would take a dramatic oil price reduction and continued robust retail street price cutting to do more than bring a Band-Aid price-wounded motorists.
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, Calif.