Lundberg in CSPNet.com

 
CSP, August 13, 2018:
Retailers Gain, Refiners Lose
Pump price bumps up, but the trend is probably over

CSP, July 30, 2018:
Gasoline Retailers Between 'Rock and a Hard Place'
Margin is squeezed and demand is soft

CSP, July 16, 2018:
Pump Price Slips a Penny
Little relief for motorists on the near horizon

CSP, June 25, 2018:
OPEC Raising Output Less Than Expected
Already arresting pump price slide

CSP, June 11, 2018:
Thanks, Crude
Retail renewal: Gasoline margin decent again

CSP, May 21, 2018:
Pump Price Reaches $3 Mark
Tough times for retail margin


 
CSP, August 13, 2018:
Retailers Gain, Refiners Lose
Pump price bumps up, but the trend is probably over

CAMARILLO, Calif. -- Price competition in pursuit of sales stands out throughout the oil industry, among world and U.S. crude-oil producers, refiners and gasoline marketers. It's fierce, and that's good—at least, it bodes well for American gasoline consumers in the near term, because a street price decline would be met with open arms at the pump island. The pump price is soaring high over last year, but gasoline demand isn't.

The U.S. average retail price of regular-grade gasoline edged up 1.83 cents in the past two weeks, according to the most recent Lundberg Survey of U.S. fuel markets, but that's probably it for the near term. The new price is $2.9268, 53 cents above its year-ago point.

Crude-oil prices slipped a little during the two-week period, and U.S. refiners pushed the welcome price cuts through into wholesale classes of trade. They also jacked up their capacity use rates. The overall refining capacity utilization rate is close to 97%, up by nearly three points.

But U.S. gasoline demand is weak. So far this year it is not showing growth, especially due to the lack of robust jobs growth, and with the pump price premium over last year's retail prices contributing to soft demand. This lack of gasoline demand growth is bad news for refiners, jobbers, retailers and, of course, consumers.

Now refiners have lost some of their gasoline margin. Retailers, though, gained gasoline margin. The average retail margin on regular grade had been very narrow, and the recent wholesale price cuts were a lifesaver as retailers on average kept the cuts rather than pass them through to the street. Nationally, the average retail margin on July 27 was a dangerously narrow 15.3 cents. On Aug. 10 it was 25.01 cents, better by 9.71 cents—nothing to rave about, but a nice recovery.

There are still some very tight margins around the country, though, with the Aug. 10 snapshot revealing practically zero in Salt Lake City, and notably skinny levels in many markets, including Denver, Houston, Philadelphia, Indianapolis and Baltimore.

Assuming oil prices stand pat or erode further, and U.S. gasoline supply remains in surplus relative to demand, retail gasoline prices may fall by a few—or several—cents per gallon in coming weeks.

Camarillo, Calif.-based Lundberg Survey Inc. is an independent market research company specializing in the U.S. petroleum marketing and related industries. Click here for previous Lundberg Survey reports in CSP Daily News.


Tel:(805)383-2400  Email:lsi@lundbergsurvey.com  Fax:(805)383-2424