Pump Prices Still Climbing

Grateful gasoline margin gains again
Photograph: Shutterstock

CAMARILLO, Calif. — The U.S. average regular grade pump price moved up a further 4.97 cents per gallon (CPG) in the past two weeks, to $3.4911, according to the most recent Lundberg Survey of U.S. fuel markets. This is a heavy $1.2998 above its year-ago point.

While retail price was ascending, wholesale prices were descending.

Thus, retailers were able to “pocket” buying price cuts, on average, and in addition raise street prices. U.S. average retail margin on regular grade zoomed up 9.12 cents per gallon to a hefty 33.89 cents.

Continuing up the supply chain, one sees wholesale gasoline price cutting by refiners who passed on most, but not all, of the crude oil price cuts they received during the two weeks. So refiners gained a bit of gasoline margin as well.

But all is fleeting: The West Texas Intermediate (WTI) near-month futures price dropped the equivalent of 5.93 CPG between Oct. 22 and Nov. 5, but on that day, Nov. 5, they bounced upward by 5.86 CPG, a wipeout.

Due to global oil demand recovering but no similar oil supply bonanza from OPEC+ or U.S. shale oil producers forming, oil prices seem to have no chance for a major retreat and may well swell far higher from here.

As for gasoline, with no price relief coming down the oil price pipeline anytime soon, it also has the heavier burden of rising ethanol prices.

The now emerging period of lower cost from higher allowable ‘winter blend’ vapor pressure maximums will be a drop in the bucket and bring no consequential price relief to motorists.

For now, gasoline retailers are looking flush as to margin: Retail margins are averages and mere snapshots in time, come and go with the wind, and are not profit. Leaner times may come in an instant. An example of an instant in the sun is Indianapolis, where the weighted wholesale price fell close to 9 CPG in the past two weeks, while the retail price was climbing steeply by just over 8 cents. Upshot: a margin expansion of nearly 17 cents to 48.31 on Nov. 5. Just a month ago, Indianapolis margin was under 30 cents.

  • 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, Calif.

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