CAMARILLO, Calif. -- Retail gasoline prices inched up 3.63 cents per gallon in the past three weeks, to $2.2209 for regular grade nationwide, according to the most recent Lundberg Survey of approximately 7,000 U.S. gas stations.
Crude oil prices surged $8 per barrel during the same periodwith New York Mercantile Exchange (NYMEX) near-month West Texas Intermediate (WTI) up $7.90 or the equivalent of 18.81 cents per gallon. On the street, gasoline followed crude up, but at a snail's pace.
Hopefully this example will help put to rest the often-mouthed myth that retail gasoline prices always zoom up right along with crude, but always lag crude on the way down. As always, the precise behavior of crude versus gasoline depends on the starting and end points in time as both are in flux.
The reasons that gasoline trailed crude's price hikes include the abundance of gasoline during a still-low demand month and the fact that many retailers have not passed through their wholesale price hikes.
Behind the moderate four-cent rise at the pump is half of U.S. cities with lower average prices and the other half with higher prices. Overall, retailers took a big margin loss, down nearly 11 cents, to less than seven cents on regular.
One near-term scenario for street prices: Crude oil prices to slip slightly but retail margin to see some recovery, dovetailing with tighter gasoline supply as seasonal demand buildsresulting in moderate, not extreme, retail price increases.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.