CAMARILLO, Calif. — During the Oct. 8-22 period, the U.S. average regular grade retail gasoline price climbed 12.92 cents to $3.4415 per gallon, according to the most recent Lundberg Survey of U.S. fuel markets. The metro-oriented U.S. average retail diesel fuel price rose even more, 13.69 cents to $3.5912 per gallon.
In the past year, gasoline shot up by $1.22 and diesel by $1.10. The full rise since bottoming out back on Nov. 20 is $1.26 for gasoline; for diesel, bottoming on Nov. 20 last year, the full rise is $1.12.
These differentials are obvious detriments to demand recovery. As demand dampeners, they are thus a down influence on prices—but they are no match for the brute strength of crude oil price hikes, which from a year ago forward resemble what retail fuel prices did. Oil prices in just the past month have flexed more muscle and there is no imminent indicator that they will beat a retreat.
Near month West Texas Intermediate (WTI), for example, is up $9.78 per barrel since Sept. 24. This is equivalent, in cent-per-gallon (CPG) terms, to a hike of 23.3. The retail average gasoline price is up 18.9 cents during the past month. By that measure, retail gasoline has not quite caught up with oil.
Beyond oil, other rising costs such as labor, utilities, insurance and rents/leases are mounting cost burdens for the downstream. Higher tax inside price in some states, including those designed for climate change prevention, has added to price dragging on demand.
In both gasoline and diesel but especially the latter, the latest retail price hikes are accelerating the blows to the broader consumer economy via freight costs passing into prices of nearly all delivered goods.
Behind the translucent curtain of fuel retailing, downstream industry margins on gasoline appear insufficient for refiners, distributors and retailers to prosper—especially in light of nearly two years of debilitation. In this latest two-week period, both the refining and retailing sectors saw slight gasoline margin gains; however, no energy policy factor stands ready to turn on the world's crude oil spigots which would work to rationalize oil prices and heal damaged demand.
In the past two weeks, unusual during a time of price hikes, retailers have recovered 2.12 CPG in regular grade margin. But the current 24.77-cents margin still remains 5.46 cents skinnier than it was a month ago.
That is pretty stark versus that oil producer price gain of 23.3-CPG equivalency. The need for further margin recovery is one reason some pump prices may well continue rising, even if oil prices do not.
- Click here for previous Lundberg Survey reports in CSP Daily News.
Trilby Lundberg is publisher of the Lundberg Survey of U.S. fuel markets. Lundberg Survey Inc. is based in Camarillo, Calif.