CAMARILLO, Calif. -- The flooding of refining facilities, stoppage of production of petroleum product, and product dislocation wrought by hurricanes Harvey and Irma is now quickly being rectified, and gasoline-price cutting is taking place. The national average retail price of regular-grade gasoline is down 7.17 cents over the past two weeks and is now $2.6232, according to the most recent Lundberg Survey of approximately 2,500 U.S. gas stations.
That cut is less than one-third of the street-price hike that Harvey and Irma caused. And as production and distribution continues to normalize, consumers may well receive another 7-cent price cut, or more, very soon.
The natural bent of the fuels industry, from refiners through retailers, is to cut price and gain volume when possible. Refiners would have cut wholesale prices even faster if not for rising crude-oil prices late last week. Still, unless oil prices strengthen further now, street prices should continue to tumble as jobbers and retailers pass price cuts through. Further normalization of supply flows will probably deliver more and more price cuts, unless oil prices gain further.
In the past two weeks, refining margin on gasoline shrank substantially while retail gasoline margin burgeoned. For retailers, this was a bounce back to health from narrow summer margins, and in some cases, a pressing need to hang on to a few pennies a little longer. Case in point: Miami, where retail price has not yet dropped on average, as local retailers, after getting big wholesale price hikes, lost volume due to shortage and lost margin due to government ominously hanging "anti-gouging" laws over their heads.
Camarillo, Calif.-based Lundberg Survey Inc. is an independent market research company specializing in the U.S. petroleum marketing and related industries. Click here for previous Lundberg Survey reports in CSP Daily News.
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