The national average retail price of regular grade gasoline leaped 22.73 cents per gallon (CPG) in the past two weeks, to $3.9005, according to the most recent Lundberg Survey of U.S. fuel markets. On top of 3.59 cents in the prior two weeks, the pump price rise is 26.32 cents in a month.
Crude oil prices had already been strengthening and have now climbed, a big $5.75 per barrel in the case of U.S. benchmark grade West Texas Intermediate’s near month futures market price.
Although there are multiple reasons for oil’s price climb, the top item is Saudi Arabia’s decision extend its output reduction into September per its Ministry of Energy. This, on top of the continued reduced output by OPEC+ and Saudi Arabia’s own cut.
There is also the perceptions among some that the U.S. administration’s cancellation of the scheduled 6-million barrels adding to the Strategic Petroleum Reserve, in a long-expected start of replenishment of the SPR, represents more potential pressure on global supply down the line.
In terms of cents per gallon, WTI’s two-week rise amounts to 13.69. The rest of the U.S. retail gasoline price increase some from gasoline’s own market dynamics, being driven now by still-low stocks and strong demand.
During the two weeks, U.S. downstream business margins played roles in the consumer price as they always do. In this case refiners lost some gasoline margin while retailers regained.
The U.S. average retail margin on regular-grade increased 11.36 CPG since July 21 to 37.90 CPG. That expansion exceeded slightly the average wholesale price hike retailers receive.
But even with that strong margin increase, the retail margin erosion during the four-week period July 7-August 4 had been more than that, a loss of 12.7 CPG.
Rarely noted in news stories about gasoline, the average tax on a gallon (combined federal, state and local) is far higher than is retail margin. Nationally, average tax is currently 62.08 CPG.
In Baltimore, tax is 65.98 CPG, about triple the average retail margin of 19.38 CPG even after a recovery of 7.38 cents.
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, California.