OPINIONFuels

U.S. Oil Turns Its Back on the Middle East

Retail gasoline price uptick may prove fleeting
Photograph: Shutterstock

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.

Click here for previous Lundberg Survey reports in CSP Daily News.

Trilby Lundberg is publisher of the Lundberg Survey of U.S. fuel markets.

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.

Multimedia

Exclusive Content

Company News

Here’s What C-Store Retailers Need to Do to Succeed in 2025

Tom Newbould of consulting firm W. Capra lays out a game plan for the new year

Foodservice

Life Is Tough for Pizza Chains Right Now

Major brands like Domino’s, Papa Johns and Pizza Hut are trading share with independents

Foodservice

Make Dinner a Winner Using Key Ingredients

‘Nobody really owns that dinner daypart when it comes to convenience, and so it would be really cool for the convenience retailers to figure out how to own that’

Trending

More from our partners