Spring Demand Getting Price Battered

Gasoline prices resume rising
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CAMARILLO, Calif. — The U.S. average retail price of regular grade gasoline increased 1.71 cents in the past two weeks, after a lull in the prior period granted by crude oil, according to the most recent Lundberg Survey of U.S. fuel markets. The price at $2.9612 is up 78.19 cents during the past five months. And it is a towering $1.0341 cents higher than its year-ago point.

Since April 9 crude oil regained some up-momentum, ethanol prices jumped via the corn market, and refiners delivered those higher costs, plus a tad for lower Spring vapor pressure specs, into gasoline. Their gasoline margin narrowed some, but remains stellar.

As for retailers, on average, they failed to pass through wholesale price hikes entirely in these two weeks, so their margin dropped by 2.11 cents to 26.64 cents per gallon (CPG). In the past month, station operators have forfeited 5.53 cents.

In both downstream sectors of the oil industry, business costs from crude to ethanol to expensive EMV (Europay, Mastercard and Visa) conversion and many other mounting bills require wider gasoline margins, not narrower ones. There is already pressure on both refiners and retailers to pass through rising costs, yet the resulting higher pump prices are telling motorists to protect their own bottom lines.

Gasoline demand is so far making a pale Spring showing and an expected boom from virus vaccination and reopening may turn out to be unimpressive. Refiners and retailers are loathe to raise prices to the degree that robust demand recovery is thwarted.

Tax hikes of many stripes are lurking on the near horizon and may dim the prospects of industry competitors and their customers. Gasoline demand would be gobsmacked with a hike in federal excise, again under consideration, on top of the myriad other economic hits.

Currently, the greater Chicago market has the highest tax inside the price of gasoline (federal, state and local): 99.56 CPG. In this high-tax and high-cost market, Chicago gasoline retailers thrust 6.45 cents more onto the street in the past two weeks, having paid 3.23 more in weighted average wholesale on regular grade, thus gaining for the moment a margin improvement of 2.74 cents. Overall since early March, they have paid 7.75 cents more at wholesale, charged 16.93 cents more at retail, with margin widening by 7.56 cents. Baltimore margin hasn't fared nearly as well: Between April 9 and April 23, the weighted wholesale price climbed 3.91 cents while retail prices slipped down 1.66 cents. So Baltimore retail gasoline margin is an average 12.01 cents after a beat down loss of 5.57 CPG.

  • 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, Calif.

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