As was projected in our April 13 column, a retail gasoline price decline has occurred—a dime in the past two weeks. The national average price of regular grade is down by 10.2 cents per gallon (CPG), to $3.238, according to the most recent Lundberg Survey of U.S. fuel markets.
In the same two weeks, the weighted national wholesale gasoline price slipped by 2.1 cents, effectively squeezing retail gasoline margin by a big 8.1 cents to a skinnier 31.4 CPG.
U.S. refiners, too, suffered a gasoline margin drop. On average, they have upped the nation’s refining capacity utilization rate by 1.4 percentage points to 88.1%, but that level is still hindered by some refiners still laboring in completion of maintenance and repair projects needed for seasonal demand peaks.
So the whole U.S. downstream is operating on thinner gasoline margins, and they will be pressed to seek recovery when conditions allow.
Demand is building per its normal pattern, while the nation’s gasoline stocks are decidedly low. The required transition to lower vapor pressure gasoline specs for the prevention of smog is essentially complete, but there may still be a bit of the associated higher refining costs to flow into the supply pool.
Crude oil prices, in terms of the average of the two light grade benchmarks, rose by the equivalent of 6.7 CPG. Although the future price of futures crude oil prices can’t be known, indicators include continuing tweaking of output levels for some members of OPEC+ as the May 1 start of phasing in higher production levels looms.
In the United States, oil production slipped a bit, and there are warning statements from in the industry that if oil prices go much lower, then the domestic shale oil business will be in trouble, effectively a supply cutter and price booster. Streamlining and reducing regulations and other pro-oil industry policies from the Trump administration can’t come soon enough, some say, to prevent damage to U.S. output.
So far we have not seen a parallel pro-industry campaign to come to the aid of the suffering refining sector, especially in California, where extreme supply losses from refinery closures would mean greater reliance on foreign gasoline, which would then ripple through the national market.
Meanwhile, at the same time, the United States and others are still pushing and pulling to engage in peace talks related to Russia vs. Ukraine, China vs. U.S. tariffs and the probes into a peace and nuclear agreement with Iran. Those and other conflicts remain unresolved, and oil prices are extremely sensitive to news headlines addressing them.
Barring any big change in oil prices in the near future, the general retail gasoline price direction is likely to be, moderately, up.
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, California.
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