CAMARILLO, Calif. — The Nov. 20 U.S. average retail price of regular grade gasoline is $2.1793 per gallon (CPG), down 1.21 cents from two weeks earlier, according to the most recent Lundberg Survey of U.S. fuel markets. This makes a total decline of 8.28 cents over the past 10 weeks. The discount to one year ago is 51 CPG.
The minor pump price slippage would have been far greater if not for rising crude oil prices. This is because the fundamental damage to gasoline demand this year ceased its retreat and has doubled down—on display in unemployment, closed schools and deeper degrees of lockdown emerging. And demand's current ills are on top of the seasonal demand drops, which annually continue into the January trough.
The hike in oil prices, which may prove over-exuberant over an implied recovery in petroleum demand thanks to imminent vaccines against coronavirus, had the effect of propping up retail gasoline prices. In addition to the possibility that oil's price hike could be fleeting, world oil supply may grow in coming weeks if Libya's oil production recovery continues and if OPEC reduces the amount of its output reduction in early 2021.
Refiners are right now in a vise, caught between high prices paid for their raw resource, which they failed to pass through into wholesale gasoline, and hobbled demand for their products. The U.S. refining sector has just lost big time in terms of gasoline margin. Meanwhile the national utilization rate of total refining capacity is up.
Retailers, too, lost gasoline margin in the past two weeks. The national average on regular grade is down 0.70 CPG, to 27.60 cents—itself not a dangerously low level, but the nearly two cents'
worth of margin shrinkage in the past month makes the pain of lower gasoline throughputs worse.
While some markets are currently fetching too narrow gasoline margin and even single digit, others are exhibiting stability or better. And in some, lack of margin increase may be the result of retailers avoiding a high-profile change in their own favor due to sabre rattling by anti-gouging officialdom.
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Trilby Lundberg is publisher of the Lundberg Survey of U.S. fuel markets. Lundberg Survey Inc. is based in Camarillo, Calif.