CAMARILLO, Calif. -- The average regular-grade pump price dropped 5.65 cents per gallon (CPG) between July 22 and Aug. 5. During the same two weeks, retail margin dropped a little more than that, 5.72 CPG, according to the most recent Lundberg Survey of approximately 2,500 U.S. gas stations.
The Lundberg weighted wholesale gasoline price of regular, which includes branded and unbranded racks and lessee-dealer buying prices paid to jobbers and refiners, gained a nominal 0.15 cents and is now $1.5030. Retail margin: a pale 17.03 CPG on Aug. 5.
The national average pump price has shed nearly 21 CPG over the past nine weeks, thanks to weak oil prices up against very strong gasoline production—strong enough to outpace demand growth.
But now the decline on the street has lost steam and may soon cease. While oil prices, especially West Texas Intermediate (WTI), dropped by a similar amount to the retail price over two weeks, they regained significantly in the latest single week. As the rack price chart at Lundberg Survey shows, racks are up in the past week: Midwest unbranded gained 11 cents, while the United States gained 8.6.
Even in the West, unbranded is up more than 7 cents in the past week and branded inched up a penny. In San Diego, with its heady high retail price of $2.7040 dropping nearly 11 cents in two weeks, the weighted wholesale price dropped less, cutting 3.5 CPG out of retail margin. This margin still stood tall at more than 48 CPG on Aug. 5. The Los Angeles spot market was still scurrying down, dropping 19.5 cents between July 22 and July 29, but since then has bounced back up by 11.5 cents.
A wholesale gasoline market bottom is forming fast.
Refining margin on gasoline regained a little in the past two weeks but so far this year remains notably inferior to full-year 2015. Meanwhile, the U.S. average retail margin shrinkage of nearly a dime during the past seven weeks is another indicator that an end to the pump price slide is coming—unless, of course, crude-oil prices take a new dive.
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.
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