The U.S. average retail price of regular grade gasoline dropped 7.7 cents per gallon in the past two weeks, to $3.082.
But apparently, motorists don't see gasoline prices as low enough. Gasoline demand continues to shrink, not just seasonally but year-on-year.
This is chiefly because many non-gasoline costs have been rising.
The pump price discount to a year ago is barely helping, with the current price just 2.3 cents under what it was at this time last year.
Among consumer costs are dramatically higher winter utility bills, in much of the county led by natural gas and home heating oil. Globally, the market for heating oil's close cousin diesel fuel is tight, hiking prices. That and other consumer cost burdens are acting to instigate a backlash against gasoline demand.
Meanwhile there is plenty of gasoline supply, and U.S. refineries are running at an even higher use rate. The aggregate refining capacity utilization rate is now 94.1%. It was just 86% a month ago.
Gasoline supply and refining activity have brought on crashing wholesale gasoline prices. This, despite the fact that in this period, crude oil prices strengthened some; WTI's near-month futures price rose just over $2 per barrel to $60.08. Lundberg's daily wholesale price surveys show that last week alone, rack and DTW prices continued down in nearly all markets, led by dramatic price cuts in the West and Rockies.
The results were terrible gasoline margins for U.S. refiners, and delightful ones for U.S. retailers. A fat bonus, for the moment at least, has landed in retailers' hands while wholesale price-slashing refiners are shivering in miserable territory.
Apparent retail margin on regular grade gasoline expanded by 12.1 cents, to a very hearty 44.6 cents per gallon. Not that they do not need historically high margin, which in some markets must be far higher than that just to stay afloat. But the national average retail margin gain is sweet balm for many stresses, with the current delta some 11 cents per gallon, wider than the year-to-date retail margin. For perspective, the currently wide margin is 3 cents narrower than was the full year margin in 2024.
Refiners caught in current gasoline margin squeeze will have to attempt recovery, unless a big down move in oil prices comes to their aid. As recently plummeting wholesale prices continue to work their way down to demand-hungry retailers, we may see retail margin forfeiture, and street prices drop.
Trilby Lundberg is publisher of the Lundberg Survey of U.S. fuel markets. Lundberg Survey Inc. is based in Camarillo, California.
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