CAMARILLO, Calif. -- The summer fuel-blend transition and labor interruptions at plants mean rising prices, but lower crude-oil prices and high-capacity run rates mean lower prices. The latter two factors have overwhelmed the former two factors, according to the latest Lundberg Survey of approximately 2,500 U.S. gas stations.
True, labor strikes at some refineries have not yet concluded, and the phase-in of higher-cost, lower-vapor-pressure summer blend gasoline is not yet complete. However, street prices have reversed trend, declining anyway. This is because key down-price inputs are stronger than up-price inputs.
The March 20 retail average for regular grade is down 3.93 cents per gallon to $2.4991, thanks to lower crude-oil prices and refiners' vigorous use of capacity. Gasoline supply is more than sufficient to meet U.S. gasoline demand, which is growing both seasonally and year-over-year.
In coming days if crude-oil prices don't jump up, we may see a few more pennies drop in the retail average price. Low-vapor-pressure gasoline phase-in is complete in some areas of the country and will proceed in the rest of the product pool in April. The average retail price in California, where more acute price-hike inputs came related to labor strikes and the country's earliest summer-blend deadline, came down an impressive 15.31 cents in the past two weeks, far more than the U.S. average retail price did.
Margin on gasoline for both refiners and retailers compare well to earlier periods, so there is not currently big pressure on them to hike price for sake of margin. In fact, margin slippage may soon occur in several retail markets and among refiners pushing product into the ample pool.
Pump prices on the retreat and healthy downstream margins paint a pleasant picture with both consumers and industry benefiting. The current average street price represents a hefty discount to one year ago of nearly $1.06, encouraging already-solid demand growth.
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