CAMARILLO, Calif. -- In the past two weeks, retail gasoline prices lost two cents, putting the regular grade average at $2.7932. This was mostly due to deep cuts in the Midwest, where supply has been normalizing after late summer refining problems, according to the most recent Lundberg Survey of approximately 7,000 U.S. gas stations.
In the same two weeks, crude oil prices gained nearly $5 per barrel, which should logically affect pump prices on the upside, at least a dime. Instead, oil's hike [image-nocss] was not passed through, and refiners and retailers both lost margin. The price pressure from pipes to pumps is tremendous. The U.S. average regular grade retail margin fell by nearly half since September 7, to less than 6 cents per gallon. Retail margin shriveled to less than a nickel in many markets.
If crude oil prices remain close to their current levels, retail gasoline prices may climb 5-10 cents or more, and soon. And oil prices don't appear poised to drop. Strong world demand, and lesser factors including hurricane threats, risk from unstable oil producing countries and the weaker U.S. dollar, are such that the decision of the Organization of Petroleum Exporting Countries (OPEC) on September 11 to raise production by half a million barrels per day starting November 1 isn't likely to spur significantly lower oil prices.
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.