In the past three weeks, the national average retail price of regular-grade gasoline shed 2.1 cents per gallon (CPG) and is now $3.217, according to the most recent Lundberg Survey of U.S. fuel markets.
It was a dramatic slowdown from the prior two-week period when the price stepped down 10.2 cents.
Lower crude oil prices delivered these price cuts, but West Texas Intermediate (WTI) futures showed a little life late last week, showing that a further steep crash, even with OPEC production rises and somewhat lessened “war premium” sentiment affecting the market, is not a sure thing. In fact, petroleum demand strength is surprising some observers, even as fears of economic weakness in some parts of the world, including China, continue to limit oil prices.
In the U.S., gasoline demand is rising seasonally as always and may be more robust than usual thanks to employment emerging as stronger than expected. Although job layoffs are occurring, the work commute, a key to healthy gasoline demand, after years of work-at-home gasoline demand suppression, is still on the rebound.
As summer demand hovers ahead, U.S. refiners are responding with higher capacity usage, now up to an aggregate 90.2%. It remains hindered some by a few operational glitches around the country. And gasoline stocks are slim.
Lundberg’s daily wholesale gasoline prices climbed 8.4 CPG higher in the past two weeks on a weighted basis. The timing of these hikes combined with retail price competition has eaten a big chunk of gasoline retailers’ margin. A loss of 10.5 CPG in retail margin leaves it at a mere 21.0 cents, grossly insufficient to cover the bills, let alone return a healthy profit to station operators. This, too, points to upward price pressure building at street level.
Click herefor 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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