Jump at the Pump

Retail price finally rises on oil price hike

CAMARILLO, Calif. -- The national average price of regular grade gasoline jumped 7.33 cents per gallon in the past two weeks, to $1.8419, according to the most recent Lundberg Survey of approximately 2,500 U.S. gas stations. It is the first rise, apart from an uptick of less than a penny during fall 2015, in eight months.

Gas station

The current price is a juicy discount of nearly 70 cents per gallon under its year ago point.

The price finally bounced up because oil prices did.

Both WTI and Brent prices have recovered some in these two weeks, rising about twice as much as retail gasoline did.

Although refiners did pass through most of the oil price hikes they got, they still suffered a little more gasoline margin shrinkage. Retailers suffered a nickel loss in gasoline margin on average, and now achieve a tighter delta of less than 17 cents on regular grade.

Supporting the retail price rise is robust gasoline demand, both seasonally and year on year. The retail market is not yet reflecting the seasonally rising costs of lower vapor pressure maximums except in one region. Those cost hikes loom over the next several weeks, but won't be visible to the naked eye if oil prices are beating a retreat.

From here in the near term, current gasoline market conditions, considering weaker downstream margins and assuming approximately steady oil prices, suggest gentle upward pump price movement instead of a dramatic spike.

Camarillo, Calif.-based Lundberg Survey Inc. is an independent market research company specializing in the U.S. petroleum marketing and related industries.

Click here for previous Lundberg Survey reports in CSP Daily News.

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