CAMARILLO, Calif. — During the two weeks June 10-June 24, the national average retail price of regular grade gasoline slipped by 4.48 cents, to $5.0542, according to the most recent Lundberg Survey of U.S. fuel markets. The cause is a dramatic down price correction in crude oil markets, translating to big rack price cutting by refiners, and arriving by bits to street level. The last pump price drop was nine weeks ago, and it was followed by more than 86 cents in price hikes through June 10 because oil prices bounced back up.
That doesn't seem very likely this time, because oil and refined product buyers around the world are being inundated by indications that a recession is in the works. Some voices warn that it is already here.
OPEC+ looks to be unable to enlarge oil output dramatically, keeping oil supplies tighter than they otherwise would be. And a powerful supply curtailment from the embargo of Russia is rendered less effective by enthusiastic liftings from non-participants such as India and China. But at the same time, demand running scared has put oil and product markets on notice.
In the United States currently, the one-year price premium at retail is $1.9026 per gallon, making each 15-gallon fill an average $28.55 more costly.
U.S. refiners lost a big chunk of margin on gasoline as they raced to pass through oil price cuts. Rack price cuts exceeded those in the futures market. So on average, wholesale price breaks have allowed a small retail price slide.
For their part, dealers and other gasoline retailers are having a moment: Margin shot up from 21.20 cents to 61.74 cents in the past two weeks, a level not seen since spring of 2020. This is thanks to timing and the fact that for most of the year retail margin has been unimpressive, and it can't last: The entire petroleum chain is staring demand backlash in the face. Oil producers, refiners, product wholesalers and retailers are being driven hard to chase sales.
Another dime or more in price relief at the retail pump may be just around the corner, but thanks to upstream constraints does not seem poised to become a major crash.
Click here for previous Lundberg Survey reports in CSP Daily News.
Trilby Lundberg is publisher of the Lundberg Survey of U.S. fuel markets. Lundberg Survey Inc. is based in Camarillo, Calif.