CAMARILLO, Calif. — The national average retail price of regular grade gasoline moved up another 5.06 cents in the past two weeks, a far smaller bump than recently seen. The new price, $2.9449 per gallon, is 76.56 cents higher than it was when the surge began back on Nov. 20. It is 78.66 cents above its year-ago point. It's the highest average since May 3, 2019, according to the most recent Lundberg Survey of U.S. fuel markets.
Now that higher oil prices that hit earlier this month have traversed the whole chain to the street, it may be that oil resumes its down movement once the blocked Suez Canal problem looks to be resolved soon.
Oil prices bounced immediately on the news that the giant container ship had foundered at the bank due to severe weather. While tugs and heavy equipment labor to get it floating and free, the congestion of waiting ships at both ends of the canal hoping to avoid sailing around Africa instead is impacting the costs of numerous products and services associated with the crucial waterway. If the stoppage is quite brief, normalized oil delivery and prices could occur next month.
OPEC+'s rebooting its production cut again seems likely, which suggests relative oil price stability. Absent worsening of the geopolitical Middle East tensions, significant oil price decline would likely be gradual as the currently high prices beckon more and more shale oil to re-enter the market.
U.S. gasoline supply is more than sufficient. Refining capacity downed during last month's storm and power outage is largely back up. Refiners are mostly ready, willing and able to make enough, even more than enough, gasoline to satisfy gasoline demand as hopes are pinned on demand recovery with vaccinations and Spring's normal up-curve. At the moment, the refiners not handicapped with idled capacity are enjoying very attractive gasoline margins, but glut can render them fleeting.
Gasoline retailers have finally seen strong margin recovery, on average: Since March 12, when regular grade fetched a mere 15.41 cents per gallon (CPG) nationally, the all-classes weighted wholesale price dropped 11.79 cents, while retail edged up a nickel, translating to a margin win of 16.77 cents to a more livable 32.17 CPG. So far in 2021, margin is a notably narrow 20 cents, and meanwhile, retail business costs continue to rise.
Assuming no near term zooming crude oil price trajectory, gasoline supply and demand may put a stop to the pump price run-up or nearly so, or even send prices down.
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Trilby Lundberg is publisher of the Lundberg Survey of U.S. fuel markets. Lundberg Survey Inc. is based in Camarillo, Calif.