Pump Price Slips a Penny

Little relief for motorists on the near horizon

CAMARILLO, Calif. -- During the three weeks from June 22-July 13, crude-oil prices were up slightly but remained below earlier levels. U.S. refiners, the top rung of the downstream ladder, and gasoline marketers and retailers—the lower rungs—are all under pressure to restrain price increases due to weak gasoline demand.

Refiners, and to a lesser degree retailers, suffered gasoline margin erosion during these three weeks. There is a gap of some 43 cents per gallon (CPG) between high and low retail gasoline margin around the country, according to the most recent Lundberg Survey of U.S. fuel markets. Nationally, a mere two-bit margin, 25.52 cents, was garnered by retailers on July 13.

Since June 22, the national average retail price of regular grade slipped by one penny to $2.94. The current price hovers a discomfiting 63 CPG above the year-ago point. What crude-oil prices do next and what subsequent wholesale gasoline prices do within the context of refiner, marketer and retailer gasoline margins, will affect retail price for motorists. Price resistance at street level is a tail wagging the dog for downstream margin. Meanwhile, the capacity utilization rate of U.S. refiners remains historically strong, significantly above what it was a year ago.

Crude-oil price responses to global supply and demand trends and events aren't immune to daily battling news headlines, including many possible imminent changes such as a Saudi output increase, Venezuela output decrease, sanctions reimposed upon Iran, India's low interest in honoring the same and reported discussions in the United States by the Trump administration about releasing oil from the Strategic Petroleum Reserve.

A likely retail gasoline price scenario is continued slippage, but at a very modest rate.

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.

Photo courtesy of Pixabay


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