Lundberg in CSPNet.com

 
CSP, July 10, 2017:
Retail-Margin Collapse
Is pump-price slide ending?

CSP, June 26, 2017:
Win-Win-Win in the Downstream
Oil, wholesale gasoline and pump prices drop

CSP, June 12,2017:
The SOB of It All
Pump-price inertia

CSP, May 22, 2017:
Pump Price Slips Half a Penny
Crude oil bounce a no-show

CSP, April 24, 2017:
Opinion: As Prices Dip, Who's Passing On the Savings?
Crude-oil costs have dropped, but gasoline prices are on the rise

CSP, April 10, 2017:
Opinion: Pump-Price Pressure Increasing
Crude and gasoline both up a dime


 
CSP, July 10, 2017:
Retail-Margin Collapse
Is pump-price slide ending?

CAMARILLO, Calif. -- For 11 weeks, the average retail price of regular-grade gasoline has been declining. The total drop since April 21: 15.3 cents per gallon (CPG). The current price, $2.3085, is down 1.49 cents from two weeks ago and sits 1.61 cents above its year-ago point, according to the most recent Lundberg Survey of approximately 2,500 U.S. gas stations.

Retail margin had stabilized in healthy territory through most of June, at a level nearly a nickel better than it was during full calendar-year 2016. But now it has collapsed to just 14.62 CPG, shrinking nearly a dime since June 23.

As usual, this margin crash is the result of both timing and retail-price competition. The U.S. weighted average regular-grade wholesale price rose 7.17 cents in these two weeks, and the U.S. weighted average tax on gasoline rose by nearly a penny.

Relief may come quickly. Crude-oil prices dropped on July 7, and refiners, whose margin on gasoline has been rosy, may well consequently cut wholesale gasoline prices. As for the average tax hike—the result of several states raising their excise hits on gasoline—affected retailers have had scarce time to react and will need to.

Two of the markets that just suffered tax hikes as well as wholesale price increases are Indianapolis (10 cents more tax, 8.65 cents more for wholesale over two weeks), where margin was shaved a nickel, and Memphis, Tenn. (4 cents more tax, a dime more for wholesale). Indianapolis margin remained comparatively stable in the neighborhood of 24 to 29 cents, where it has ranged for several weeks. But Memphis margin collapsed by nearly 16 cents, and in our July 7 snapshot is actually in the red.

If oil prices drop further, the average pump price may not manifest any hike. If oil prices stay where they are, then a modest price rise at retail will likely come anyway, because margin of less than 15 CPG is not financially sustainable in today's retail gasoline industry.

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.


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