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OPINIONFuels

Pump Price Slippage Resumes

Retailers gain gasoline margin
Photograph: Shutterstock

CAMARILLO, Calif. — The national average retail price of regular-grade gasoline shed 4.47 cents per gallon (CPG) during the past two weeks, according to the most recent Lundberg survey of U.S. fuel markets. This was nearly half of the strong gain it made during the Sept. 13-27 period. Current conditions point to another drop soon.

The weighted wholesale gasoline price, combining buying prices by class of trade, retreated 7.67 CPG in the past two weeks. So retail margin improved, with gasoline station owners and operators "keeping" about half the wholesale price decline. The U.S. average retail margin on Oct. 25: 24.24 CPG.

Margin improvement took place chiefly in the West, as regional supply tightness has been loosening, sending rack prices plummeting back down toward Earth. Meanwhile, there were some modest margin gains in several Midwest and Eastern markets, but margin erosion took place in much of the Gulf region.

Albuquerque, N.M., which currently has one of the lowest average regular-grade retail gasoline margins in the country, had just 17.21 CPG on Oct. 11. Two weeks later, the weighted average wholesale price slipped by less than a penny, while the market average retail price slipped 9.5 cents. The result: Margin in this market caved by about half to a mere 8.35 cents. Margin on midgrade and premium fared even worse.

Crude-oil prices continued to be rather stable, and in the case of West Texas Intermediate (WTI) it rose the equivalent of about half of 1 cent per gallon. WTI has spent most of the time in 2019 so far within a $10-per-barrel span of $50 to $60. If oil prices do not spike and there is no extreme loss to gasoline supply, further modest pump price retreat seems likely. The refining maintenance season—including planned and unplanned idling of some capacities—appears to have peaked, while at the same time U.S. seasonal demand decline is underway.

Camarillo, Calif.-based Lundberg Survey Inc. is an independent market research company specializing in the U.S. petroleum marketing and related industries.

Click here for previous Lundberg Survey reports in CSP Daily News.

 

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