CAMARILLO, Calif. -- Self-serve regular grade gasoline now costs $2.9473 on average, up 3.69 cents a gallon since April 21. This follows a 25-cent hike during the prior two-week period, and a total of some 65 cents since January 6, according to the most recent Lundberg Survey of approximately 7,000 U.S. gas stations. The rate of increase has greatly slowed, and in fact may have already skidded to a halt.
In the past few days, prices at unbranded rack, the most sensitive of the three wholesale [image-nocss] classes to any change in crude price, gasoline supply or demand, were down sharply in most markets; branded rack was down, too; and dealer buying prices were steady or down slightly where they apply.
More evidence: Retail prices are down in the Midwest and Gulf Coast regions (notably in Omaha, down 13 cents, and down a dime in St. Louis, Jackson, Des Moines, Louisville, a nickel lower in Atlanta, Birmingham, and a couple of cents down in several more cities including Houston, Chicago and Atlanta).
In these two weeks, the raw material became less costly, and gasoline supply was augmented. Crude oil prices cooperated (losing $5 a barrel during the same two weeks), gasoline demand flattened to no growth, some refining capacity returned to operation, and imported gasoline played its role. This while refiners, distributors and retailers wrestled pretty successfully with this year's expanded reliance on ethanol. Ethanol's distribution and delivery costs at higher volumes added to the corn derivative's already high cost of purchase, refinery blending, and lower energy content. While ethanol made its way outside the pipeline system to new locations, the delay left spotty retail gasoline outages around the country.
Within days of President Bush's announcement of a wide array of measures that would grow supply and shrink price, followed by extraordinary countermeasures and peculiar notions from all political quarters, pump prices appear to have already peaked.
At least for now. With peak demand just weeks away, to be satisfied with greater strain on refining capacity and imports than ever, always with crude oil the longer-term main determinant of price, and given the potential for seasonal storm damage to infrastructure, retail gasoline price hikes might soon resume. If so, then more price impetus will be added for politicians to rig up ways to send gasoline marketers and retailers to jail for price gouging. The most pro-consumer parts of the industry will be explaining to government that to fail to hike price sufficiently to prevent product shortage is to guarantee tanks running dry.
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