CAMARILLO, Calif. — The current U.S. average retail price of regular grade gasoline is $2.2453, up one half of one penny in the past two weeks, according to the most recent Lundberg Survey of U.S. fuel markets. It marks what may well prove the peak price after a 31.82 cents per gallon (CPG) climb that started 13 weeks ago.
The bottom point of the COVID-driven price crash was $1.9271 on April 24.
These past two weeks saw an expansion of retail gasoline margin on regular—finally—after margin had deteriorated for 15 weeks between March 27 and July 10. The extreme retail market dynamics as demand was decimated from fear and lockdowns allowed for a brief period of skyrocketing margin in late March. Margin slashing began on March 27, including a decline of nearly 27 cents of it between late April and mid-May alone, for a total loss of 56 cents during 15 weeks. So this increase of 3.07 cents between July 10 and July 24 is a big deal.
But current national average margin is an insufficient 26.44 CPG, with levels barely a dime, or worse, in some locations.
Refiners, meanwhile, gave up some gasoline margin, making wholesale gasoline price cuts and raising the U.S. refining capacity utilization rate a little. Ethanol prices declined during the period, aiding the rack price reductions. Since crude oil prices barely changed in these two weeks, the gasoline market allowed for retailers to recover those three little pennies.
If crude oil prices do not strengthen short term, then the dominant retail gasoline price directional will probably be demand. The supply glut remains, while demand is under-performing and may falter further.
From this point, retail price cutting seems probable.
Click here for previous Lundberg Survey reports in CSP Daily News.
Trilby Lundberg is publisher of the Lundberg Survey of U.S. fuel markets.