CAMARILLO, Calif. — The U.S. average retail price of regular-grade gasoline has climbed 3.82 cents per gallon (CPG) in the three weeks ending Jan. 10. It is now $2.6447.
But crude oil did not cause it, and in fact crude-oil prices slipped slightly during the three weeks. West Texas Intermediate (WTI) in particular has descended $4.23 per barrel—the equivalent of a dime per gallon—since Jan. 3, when the United States eliminated Iranian general Qassem Soleimani. It seems as if domestic crude oil has turned its back on Iran.
This street price increase, an average of 1.27 cents per week, came after a drop of 8.4 cents between Nov. 8 and Dec. 20. On Dec. 20, retail margin was a weak 21.68 cents, having lost a big 6.24 cents during the prior two-week period. As the weighted average national wholesale price edged down 1.16 cents, retailers gained 4.89 cents for a margin of 26.57 CPG.
Refiners, too, gained gasoline margin in this period, but the modicum of relief was far from enough to alleviate their acute and sustained deprivation.
Thus, since Dec. 20, the opposite of what the last installment of this column stated has happened. Now, oil is down, while retail gasoline margin and the pump price are up.
The three-week retail price increase of less than 4 cents may be the last for a while, because gasoline supply continues to overwhelm weak gasoline demand. Unless oil prices increase in more than a blip on the screen, retail gasoline prices may instead revert to retreat.
Demand growth is weak at best, and the current 33-CPG retail price penalty above the price of one year ago is a hefty negative for demand. In the trough month of the nation's seasonal demand curve, U.S. refiners are now using 93% of total capacity. Bargain crude-oil prices and the zeal to keep the world's most efficient refining system operating on high are ensuring glorious product supply.
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Trilby Lundberg is publisher of the Lundberg Survey of U.S. fuel markets.