CAMARILLO, Calif.-- The U.S. average regular grade price shed 2.86 cents in the past two weeks, to $2.7485, according to the most recent Lundberg Survey of approximately 7,000 U.S. gas stations. This is about one quarter of the pace of price cutting during the prior two week period. The current price sits about 12 cents under its year ago level. And, since the retail price hit its all-time historical high on May 18, some 14 weeks ago, the price has crashed more than 43 cents per gallon.
With [image-nocss] sufficient gasoline supply, crude oil prices slightly lower, and substantially lower retail prices, it is likely that in the United States at large, retail price declines will be minimal or nil in the near future.
Gasoline demand growth, very weak so far this year, may take on some strength due to priceand will be supported by the enhanced daylight driving opportunity brought by extended Daylight Saving Time.
Lundberg quantified the government's decision to expand 2007 DST as adding to gasoline demand. It was a negative shock to the industry at the front end during extreme Spring capacity downtime, but at the back end the decision should prove positive. As of 2007, DST does not cease until November 4.
Gasoline demand growth late summer and fall would be a nice condition for retailers, who just gave up 3 cents margin on average, and for those refiners who suffered large capacity shutdowns this year. Year to date 2007, both refiners and retailers have healthy margins on regular grade gasoline, at 49.57 cents per gallon and 11.38 cents per gallon, respectively.
Caveat repeat: Any large hit to supply of either crude or gasoline would hike fuel prices and probably depress margins along with demand. Currently, gasoline supply, prices and margins appear benign or better for investors and owners in the business, as well as for motorists.
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