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Fuels

Normalizing Prices, Margins

Retail gasoline prices drop another 7 cents

CAMARILLO, Calif. -- Regular-grade gasoline prices dropped 6.66 cents per gallon (CPG) on average in the past two weeks, to $2.5566, according to the most recent Lundberg Survey of approximately 2,500 U.S. gas stations. This reflects continued normalization of supply after damage and preventive evacuations of industry facilities took place due to hurricanes Harvey and Irma. It was due also to slight declines in crude-oil prices.

The amount of pump-price decline was virtually the same as in the prior two weeks. The Sept. 26 Lundberg report said another 7-cent drop, or more, was likely. This makes a total decline of 13.83 CPG since Sept. 8, after the price shot up nearly double that amount during the period of Aug. 25 through Sept. 8 due to Harvey and Irma.

U.S. refining capacity utilization has climbed back up and is now at an approximately normal rate for the time of year. Refineries are now making "winter blend" gasoline, which is cheaper to make. Oil prices slipped down a little. These factors, and the pressure on refiners to produce after the hurricanes—especially acute for those who had been deprived of sales—caused refiners to cut gasoline prices. Lundberg's Oct. 6 wholesale gasoline price, weighted by class of trade and combining all three grades, fell 3.37 CPG to $1.8236.

Refiners neither gained nor lost gasoline margin during these latest two weeks, while gasoline retailers did lose. Average retail margin on regular is down 3.19 cents since Sept. 22; however, at 26.85 cents in Lundberg's Oct. 6 snapshot, it stands out as attractively high. The 2017 year-to-date regular-grade retail margin, at 18.29 cents, is nearly as good as during full calendar years 2016 and 2015, both of which were standout, record-breaking years for station operators.

Camarillo, Calif.-based Lundberg Survey Inc. is an independent market research company specializing in the U.S. petroleum market and related industries. Click here for previous Lundberg Survey reports in CSP Daily News.

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