CAMARILLO, Calif. -- In the past two weeks, the U.S. average retail price of gasoline jumped nearly 13 cents, to $2.3487 on regular grade, according to the most recent Lundberg Survey of approximately 7,000 U.S. gas stations. It accelerated the turnaround begun in mid-January.
Only a few cents of that hike was crude. Crude is strengthened on OPEC's backbone to remove more of the total cutback it agreed to do, and on oil markets' heightened awareness of the danger to world oil supply that Iran's [image-nocss] continued insistence on uranium enrichment represents.
The rest of the 13-cent jump at the pump came from the U.S. oil markets' own jittery traders, those doing spot or bulk one-time contract deals. As a slew of news stories of domestic refinery glitches and planned pre-Spring maintenance projects broke, spot prices leaped and brought up prices of both paper-gallon futures prices on the NYMEX and physical gallons at the racks and Dealer Tankwagonespecially in markets supplied by downed refining capacity. There is more than enough gasoline around, just as there is more than enough crude oil around. But both markets can be spooked by scary headlines, and in this period, both were.
In this two-week period, refiners regained margin (but the level is below what it was for full-year 2006), while retailers lost. Nationwide, the retail margin is dangerously low, less than three cents on regular, a problem produced by lag time and street price competition. In half the cities surveyed on February 23, retail margin was less than one cent, or red.
It is retailers' turn to get well, and motorists' turn to pay. Near term, even if crude oil prices don't rise further, there is another nickel or dime waiting for consumers as refinery capacity utilization returns and retailers recover some of their losses.
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.