Second-Quarter Fuel Margins Hit Six-Year Low

Rising spot prices squeeze retail margins, says Raymond James

ST. PETERSBURG, Fla. -- Rising wholesale prices in April and May weighed down second-quarter 2015 retail fuel margins to a six-year low.

Gas prices

That’s according to the latest C-Store Grab-N-Go research note by Raymond James & Associates, St. Petersburg, Fla., which analyzed the financial results of chains in a coverage area that includes Casey’s General Stores, CST Brands, Murphy USA, CrossAmerica Partners, Sunoco LP and TravelCenters of America.

National retail fuel margins for regular gasoline averaged about 16 cents per gallon (CPG) in the second quarter, an 8% drop from a year ago and 13% lower than the first-quarter 2015 average. This is despite the fact that for the month of June, national retail fuel margins were 7% higher vs. a year ago, and up 30% from May year-ago levels.

Raymond James cited a more than 20% jump in oil prices in April and May for the quarter’s year-over-year decline. Retail margins ranged from 10 to 22 CPG over the second quarter, but for the most part stayed under year-ago levels throughout the first nine weeks. The Southeast and state of Texas—which includes the retail stomping grounds of CST Brands and Murphy USA—saw the greatest margin compression, off 24% and 13%, respectively.

Second-quarter 2015 national diesel margins, meanwhile, were 8% higher year over year.

For the retail chains covered in aggregate, Raymond James has modeled second-quarter 2015 margins off 2 CPG from the first quarter, reflecting industry margin figures. For year over year, Raymond James projects that the group in aggregate will see a 1.7-CPG drop, which is also in line with national margin trends.

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