The national average retail price of regular-grade gasoline dropped a further 2 cents per gallon (CPG) in the past two weeks, to $3.155, according to the most recent Lundberg Survey of U.S. fuel markets. This makes a total decline of nine cents in a month.
But this could be it for retail price relief. Now, up pressures may well dominate the array of gasoline price influencers and cause moderate hikes to be possibly followed by bigger ones in coming weeks. Depending on how crude oil prices and other factors behave, we may see 4-6 cents more at the pump this month and perhaps far more by May.
The phasing in of more stringent specs for lower vapor pressures in spring and summer to reduce evaporation and smog creation is well underway, already adding to wholesale prices while ushering in the seasonal proliferation of blends entering the pool around the country.
This process will continue during April and May, adding cost along the way. Unknowns about ethanol markets and possible vapor pressure wavers, since ethanol brings an evaporation penalty and seeks Environmental Protection Agency (EPA) mercy to offset it, are adding to the wholesale price and supply machinations.
Gasoline demand is, meekly perhaps, following its calendar climb toward peak spring-summer, and refiners are in the thick of completing maintenance and repair projects to be ready. They have added one percentage point to total capacity utilization, now 86.9%.
While U.S. refiners got a bit of gasoline margin expansion, still leaving them poorer in those terms than in 2024 and several prior years, retailers suffered a body blow. Two weeks ago, retail margin was showered with a nice 5.1-CPG expansion, but as this column pointed out, that 32.9 cents level was hardly celebratory. In these latest two weeks, the Lundberg weighted wholesale gasoline price increased 2.6 cents, to $2.22533. With retail price losing two pennies, margin is left 4.6 CPG skinnier, just 28.3 CPG.
Crude oil as always carries the most weight among gasoline price and price direction factors. West Texas intermediate (WTI) closed at $68.28 a barrel on March 21. Pessimistic and optimistic sentiments related to both Middle East and Ukraine-Russia conflicts remain built in, with a somewhat price dampening market view coming from peace-making efforts on both fronts. At the same time, OPEC introducing at last a first phase-in on production restoration starting in April is also built in, another price dampener. Indicators of improved U.S. drilling activity, and more hopeful oil industry views of U.S. regulative policies are also built in.
Any upset of those oil price factors raising supply risk would add to the normal and expected seasonal gasoline cost increases, a recipe for a pump price spike.
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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