The average retail price of regular grade gasoline dropped 7 cents per gallon (CPG) in the past two weeks, to $3.175, according to the most recent Lundberg Survey of U.S. fuel markets.
This was almost entirely due to lower oil prices: The near-month futures price of West Texas Intermediate fell the equivalent of more than 8 CPG, and the average futures price of West Texas Intermediate (WTI) and Brent crude oil fell nearly as much.
Refiners passing through price cuts into rack and dealer tankwagon (DTW) prices allowed the weighted wholesale gasoline price to decline by just over 11 cents. The nation's gasoline retailers regained 4.2 CPG in regular-grade margin, on average.
Retail margin now perches at 32 CPG, improved but by no means celebratory.
For oil prices to have declined substantially manifests the fact the down pressures outweighed up pressures. The latter includes market confusion from the recent and ongoing fluctuation in U.S. administration policy in oil import tariffs, and target nations Mexico and Canada's current and potential responses to same. Down pressures on oil prices, meanwhile, include OPEC's decision to begin output restoration starting in April, and the possibility of a start in peacemaking moves that would end the Ukraine-Russia war, which are built into oil prices, and even a hope that oil supplies from Russia, and remotely but within the realm of possibility, normalization regarding Iran's oil exports, which are also embedded in oil futures prices.
Within the U.S. gasoline market independent of global oil market changes, we have entered the spring buildup of demand increases as longer days and more clement weather allow. That seasonal demand curve plus the accompanying Environmental Protection Agency (EPA)-driven cost hikes for making spring and summer gasoline blends, along with persistent inflation also present adding to pressure upon retailers to obtain sufficient gasoline margin, are gasoline price strengtheners.
The crude oil price dictates being the prime decider for gasoline price direction, and if it remains significantly below the $70 mark, we may see little change at the pump short term, unless retailers manage to up the modest gain in average gasoline margin just seen. But if oil prices jump back up, then climbing wholesale gasoline prices would dovetail with seasonal demand and cost increases, potentially bringing outsized pump price hikes.
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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