Much Has Changed Little

Pump price a no-change, gasoline glut persists, retailers regain one penny in gasoline margin
Photograph: Shutterstock

CAMARILLO, Calif. — The U.S. average retail gasoline price did not change. The two main crude oil benchmark prices barely did either. The national pump price rose 0.12 cents per gallon (CPG) between July 24 and August 7, to $2.2465, according to the most recent Lundberg Survey of U.S. fuel markets.

The U.S. oil grade WTI dropped 7 pennies per barrel of crude, an almost invisible slice in CPG equivalent, while the European grade Brent rose a little. Oil prices are to a degree being propped up by weak currencies, especially the U.S. dollar.

In the same two weeks, U.S. refiners suffered shrinkage in gasoline margin, while U.S. retailers gained. The retail expansion of 1.04 CPG puts retailers at a U.S. average 27.48 cents delta. The retail margin gain during the past month, after plummeting from late March forward, totals just 4.11 pennies.

Wholesale gasoline prices followed at distance a drop in futures gasoline, and ethanol prices took a big step down. Both downstream sectors, refining and retailing, have been struggling and next month may prove even tougher. If schools are widely closed, September's hit to demand will be harsh, with gasoline consumption falling off more than it usually does post-August. The current retail price discount, a deep 49.73 CPG under its year-ago point, is not very inspiring, while unemployment and school closures cancel commutes. And discretionary driving such as trips for fun is still mostly canceled.

Behind the U.S. no-change in retail price, price trends were generally down in the U.S. Gulf and Midwest regions, and up in the West. Spot Los Angeles gasoline weakened last week, with California unbranded product responding with cuts. California's gasoline demand destruction is one of the saddest in the nation.

Crude oil prices are unlikely to shoot up, as OPEC and collaborators agreed in July to rescind beginning August 1 part of their earlier production cut. OPEC credited some world oil demand recovery for its decision. Meanwhile, any resulting crude oil price erosion won't trickle into U.S. gasoline demand normalization during lockdowns and quarantines.

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

Trilby Lundberg is publisher of the Lundberg Survey of U.S. fuel markets.

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