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Pump Price Defies Crude Oil—For Now

Factors point to resumption of price rise

CAMARILLO, Calif. -- The U.S. average pump price has dropped for the first time since early December, in spite of increases to its main driver, crude oil.

The national regular-grade retail average price fell 6.46 cents per gallon (CPG) over the past two weeks ending Feb. 23, 2018, to $2.5901, according to the most recent Lundberg Survey of approximately 2,500 U.S. gas stations. It is the first price relief this year. The price had risen about 14.5 cents since Dec. 15, mostly on oil prices, and soon might resume that direction for the same reason.

Oil prices are up about $4.50 per barrel depending on the grade, since Feb. 9. This is the equivalent of more than a dime in per-gallon terms. But refiners have yet to pass through their higher buying prices for the raw material into wholesale gasoline. They are under pressure to alleviate their gasoline margin squeeze by increasing product prices to their accounts.

Unless oil prices reverse direction soon, this will end the price-cutting at the pump and likely bump up retail prices soon. Adding impetus will be the upcoming Daylight Saving Time shift of motorist behavior toward stronger gasoline demand, and the higher manufacturing cost of lower Reid vapor pressure specs already affecting a portion of Southern California and set to fan out to the rest of the nation. Although no price spike is appearing on the horizon at this time, there may soon be a retail price climb of a few weeks' duration.

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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