Pump Price Loses a Nickel

Consumers hurting, demand running scared
gas station
Photograph: Shutterstock

The national average retail price of regular-grade gasoline is down 5.15 cents per gallon (CPG) in the past two weeks, to $3.7001, according to the most recent Lundberg Survey of U.S. fuel markets. This makes a total drop of 7.18 cents in the past four weeks.

If one culprit for the price retreat were the top cause, it would be gasoline demand shrinkage. Crude oil prices in fact increased in these two weeks, in a partial recovery toward April prices. Consumers are reeling from the continued elevated price, overall weakening economy and surging costs of vehicle ownership and operation. In particular, insurance and repair costs are punishing. In addition, the current price is 6.34 cents higher than it was one year ago.

So although this slim nickel price drop just seen may feel like a big help since most other consumer prices are on the rise, it is a drop in the bucket in the general gasoline demand picture.

Extreme weather has disrupted refining operations at some plants in the Gulf region, especially in Texas, sending wholesale prices up but also disrupting retail demand.

Both petroleum industry downstream sectors lost margin on gasoline in these two weeks. At retail, the loss is 3.45 CPG, thanks partly to smart upticks at the racks in the past two days hitting Midwest markets especially. Still, the national average regular-grade retail gasoline margin is 35.59 CPG, well within the survival zone overall for retailers.

Market level variance: In Albuquerque, New Mexico, retailers on average gained substantially has retail price increases far surpassed that at wholesale. Margin rose 11.29 cents, to 43.97 CPG, putting in back in the territory it was in six weeks ago. Philadelphia retailers lost 2.39 cents, with the May 17 regular grade margin averaging 29.09 cents, a huge relief from the margin on April 5 which had squeezed retailers to a very poor 11.85 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.

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