CAMARILLO, Calif. — The U.S. average retail price of regular grade gasoline gained another 5.48 cents per gallon (CPG) in the past two weeks, and is now $2.5046. The total rise since Nov. 20 is 35.53 cents, according to the most recent Lundberg Survey of U.S. fuel markets.
This is the highest retail gasoline price in one year. The Feb. 21, 2020, price was $2.5301 per gallon, after which oil fell off a cliff and so did U.S. gasoline demand, collapsing pump prices.
Gasoline has been following oil prices up, penny for penny. The retail gasoline price turned upward from Nov. 20 forward. From that day forward, West Texas Intermediate crude rose $14.70 per barrel, the equivalent of 35 CPG. "OPEC+" is "optimistic" about 2021's tightening world supply/demand balance and the nice oil price hike manifested in same.
But U.S. downstreamers, the refiners and retailers, are not sitting so pretty. In these two weeks both sectors lost margin on gasoline. Downstream is suffering both very low gasoline demand and very high gasoline supply. That combination logically pulls gasoline price downward, and price is in fact lower than it otherwise would have been if not for those two pulls—however, crude oil, undisputed king over petroleum products, is not allowing gasoline prices to plunge.
This nickel hike at the pump is about half the price hike that occurred during the prior two week period, because the oil price climb took a breather in late January. Now, oil is up another dime per gallon equivalent, so gasoline prices may follow it up another nickel to catch up.
Retail gasoline margin dropped 1.3 CPG to 19.3 cents on Feb. 5. Margin had regained close to 3 cents between Jan. 8 and Jan. 22. But with that exception, margin has been chipped away ever since Oct. 23. During the past 15 weeks, margin on regular grade has lost nearly one-third—a loss of 9.96 CPG.
Short term, it appears that gasoline demand weakness will continue, especially with far higher prices. The retail price discount to one year ago is just 3 cents and may soon disappear altogether. And the futures market sees higher crude oil prices next month.
- 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.