CAMARILLO, Calif. -- On December 16, the U.S. average retail price of regular grade was $3.2393 per gallon, down 5.25 cents per gallon from December 2, according to the most recent Lundberg Survey of approximately 2,500 U.S. gas stations. It continued its slide from late October, totaling a drop of nearly 23 cents per gallon over two months.
Diesel is down over the past two weeks as well, a six-cent decline to $3.9598 per gallon.
The price cuts are from crude, with the West Texas intermediate (WTI) crude near-month futures prices down $7.43 per barrel since December 2. Lower ethanol prices and still-falling gasoline demand also contributed to gasoline price weakness.
The OPEC meeting on December 14 wasn't a discernible oil price factor. Oil has been skittish about Europe, with fallout from its debt crisis in flux and uncertain.
Downstream margins had small gains during the two week period, taking a bit of comfort from falling crude. Refiner margins on gasoline are still extremely thin, while retailer margins are back in healthy ground after recovering nearly three cents.
From here, if oil doesn't climb, and since underemployment is not about to disappear, we may see ethanol as a significant price factor. Its tax subsidy will finally dry up on January 1, suggesting higher prices for ethanol-blended gasoline. Whether the 4.5-cents-per-gallon impact is visible to motorists in retail price change will depend on what crude oil, wholesale prices, and both refiner and retail margins are doing.
Camarillo, Calif.-based Lundberg Survey Inc. is an independent market research company specializing in the U.S. petroleum marketing and related industries.
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