Lundberg in

CSP, June 14, 2021:
Bounty Upstream, Deprivation Downstream
Price resistance allowed gasoline up 2 just pennies

CSP, May 24, 2021:
An 8-Penny Pittance
Gasoline prices up on Colonial, corn

CSP, May 10, 2021:
Low Gasoline Margin Unsustainable
Pump price now $3.02, more to come

CSP, April 26, 2021:
Spring Demand Getting Price Battered
Gasoline prices resume rising

CSP, April 12, 2021:
Pump Price a No-Change, May Drop From Here
Retailers forfeit gasoline margin, refiners gain

CSP, March 29, 2021:
Pump Price Run-Up Is Nearly Spent
Margin relief for gasoline retailers

CSP, June 14, 2021:
Bounty Upstream, Deprivation Downstream
Price resistance allowed gasoline up 2 just pennies

CAMARILLO, Calif. — In the past three weeks, crude oil prices strengthened by about 16 cents-per-gallon (CPG) equivalent. But gasoline on the street edged up a mere two cents, according to the most recent Lundberg Survey of U.S. fuel markets.

This is because refiner pass-through was thwarted: They paid some $7 more per barrel for their raw resource but were unable to realize a similar pass-through into gasoline.

The June 11 national average retail price of regular grade gasoline is up 2.42 CPG since May 21, to $3.1277. This price is 94.84 CPG above its year-ago point.

One case behind those averages: The retail price in California is $4.2159, up 7.46 CPG. in the past three weeks and up more than 14 cents in the past five. California did not suffer a pipeline closure, which occurred in the East last month, but it does suffer the bite of two anti-“climate change” fee regimes which add a combined 38 CPG to retail price in addition to the 88 CPG in taxes. Californian motorists are paying $1.22 more at the pump on average than they did one year ago.

Nationally, refiners lost a sizeable chunk of gasoline margin because a slew of negatives is impacting the demand side, for example: motorist resistance to far higher pump prices; already pale demand bitten by sharper overall inflation; and post-pandemic lockdowns, a sluggish rate of return-to-work. So far, the normal Spring ramp-up in gasoline demand is a virtual no-show. At the same time, refiners have stepped on the gas in capacity utilization, now up three percentage points to 91.3%, and imported product made a strong showing having had bigger incentive while Colonial Pipeline’s downtime was a big unknown.

As oversupply of product swells, the cessation of COVID-expanded federal unemployment benefits several weeks early in 25 states will soak up some product but it remains to be seen how acute the supply-demand imbalance will be.

The nation’s gasoline retailers paid wholesale price hikes during the three weeks a little over half the hit that refiners paid in higher oil prices. With that wholesale price hike, 8.76 CPG and retail price showing barely a bounce, station owners and operators lost 6.44 CPG in gasoline margin. Retail margin is currently 23.82 cents for regular grade.

It is unknowable how global oil demand, the price-boosting effect of central banks’ money printing, and Iran sabre rattling in the Middle East and elsewhere, among other factors, will determine near-term crude oil prices. But if they change little, retail gasoline prices may also show little change for now. Downstream margins got hit but they are not yet critically skinny. Damaged gasoline demand is not about to hand them a stellar recovery.

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

Trilby Lundberg is publisher of the Lundberg Survey of U.S. fuel markets. Lundberg Survey Inc. is based in Camarillo, Calif.

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