ST. PETERSBURG, Fla. -- For fuel retailers hoping to make money, the second quarter of 2016 is off to a weak start.
Retail gasoline margins in April were about 7% below the three-year average for the month, or off about 15 cents per gallon (CPG), according to the latest Convenience Store Grab-N-Go research note by Raymond James & Associates, St. Petersburg, Fla. On a year-over-year basis, margins were up 9%, although April 2015 margins were atypically low.
National retail diesel margins dropped 32% year over year to hit a five-year low for the month as rising wholesale prices cut margins almost in half in the middle of April.
On a regional basis, the Southeast and Texas enjoyed the largest year-over-year margin growth, up 31% and 18%, respectively. But both regions fell short of the three-year average, with Southeast retail margins down 22% and Texas off 10%.
April is traditionally one of the three weakest months of the year for retail fuel margins. May and June margins rise 20% to 40% sequentially on growing demand and the transition to summer fuel blends. In fact, national retail fuel margins during the first two weeks of May rose about 20% sequentially, and were about 25% above levels from a year ago.
For the quarter ending in June, Raymond James analysts are projecting a 10- to 15-CPG increase in gasoline margins year over year, and a 10- to 15-CPG yearly decline in diesel margins.
Raymond James’ coverage area includes Casey’s General Stores, CST Brands, Murphy USA, CrossAmerica Partners, Sunoco LP and TravelCenters of America.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.