CAMARILLO, Calif. -- Retail gasoline prices continued to fall in the past two weeks, with regular grade down 3.81 cents to $3.6582 per gallon, despite effects of Hurricane Ike and slightly higher crude oil prices. Prices are down nationally more than 45 cents per gallon since the all-time high eleven weeks ago on July 11, according to the most recentLundberg Survey of approximately 7,000 U.S. gas stations.
Lower gasoline demand, in three ways (higher price this year, the seasonality curve and storm related price spikes) is one [image-nocss] chief factor in the retail slide. Much lower crude oil prices than prevailed in recent months is the other.
Better refining margin, too, shows itself in the latest data as pro-solution. Some refining capacity that had been closed due to terrible gasoline margins is coming back up, drawn by local price spikes from Hurricane Ike. So are imported gallons, thanks to prices here and to White House directives for federal Environmental Protection Agency (EPA) waivers of certain product specs.
Atlanta, with the highest average price in our national sample save Honolulu, at $4.14, had a 39-cents-per-gallon price hike in the past two weeks. There, as in other price-shocked locales, wholesale prices are crashing as supply corrections meet with slumping demand. Wide retail margin announces room for more product from anywhere it is economical to send from, which in turn will normalize that margin. Witness Little Rock, Ark., with a 31-cent retail price drop in the past two weeks. Remaining closed stations, whether due to storm damage, lack of pipeline product, from panic-buying and the fear factor (retailers freezing price and getting sucked dry or simply closing to escape accusations of price "gouging") will open sooner than later thanks to margin spikes.
From here, unless crude prices rise substantially, which they appear unlikely to do, retail prices will continue to fall nationally, and dramatically so in Ike-affected territories. In Ike's wake, despite damage from government threats and interference that helped close many stations down, the general public will have been well served by high prices that lure supply.
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