CAMARILLO, Calif. -- In the past three weeks, the U.S. average retail regular grade price fell 8.98 cents gal. to $3.6110, according to the most recentLundberg Survey of approximately 2,500 U.S. gas stations. It's a reversal compared with the prior two weeks, and it comes from crude oil price cuts.
Crude's price cuts come from pessimism about the United States and other economies as poor economic conditions spell trouble for oil demand growth. World oil demand growth has not been arrested but it has been put on [image-nocss] notice by bad economic headlines.
Refiners passed through part of the oil price cuts, and retailers passed through part of the wholesale gasoline price cuts. The nearly nine cents drop at retail is what was left over.
Both refiners and retailers have, for now at least, enhanced their gasoline margins. In coming days there may be a few more cents decline at retail due to the lower oil prices, but only if oil prices don't rebound. Some price projectionists view the petroleum market as merely cost-plus, neglecting dynamic industry margins that must average in the black in order for industry sectors to succeed. Refiners and retailers may be unfairly painted as gougers because oil has dropped in the past three weeks more than retail gasoline has.
Behind the No. 1 input to gasoline price, which is the cost of the crude material, is another negative input to price: shrinking U.S. gasoline demand. Motorists underemployed last year and also this year are confronting an average retail price nearly 84 cents higher than it was on August 13, 2010.
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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