Lundberg in

CSP, October 11, 2021:
Europe's Renewable Fuels Reliance Hitting U.S. Gasoline Pumps
Retail margin loses again

CSP, September 27, 2021:
Upstream Wins Again
Downstream margin losses protecting consumers

CSP, September 13, 2021:
Gasoline Demand Prospects Dimming …
… But refiners, retailers in decent defense position

CSP, August 30, 2021:
Watchword: Volatility
Oil, COVID and Ida fight for gasoline price control

CSP, August 16, 2021:
Crude Oil Price Break Blesses Refiners
Marketers, retailers hope it flows downstream

CSP, July 26, 2021:
Gasoline Price Rises Petering Out, Crude Willing
Retail margin awarded one-penny gain

CSP, October 11, 2021:
Europe's Renewable Fuels Reliance Hitting U.S. Gasoline Pumps
Retail margin loses again

CAMARILLO, Calif. — Oil prices manifested greater strength in the past two weeks, especially the week ending Oct. 8. The near-month futures market price of West Texas Intermediate for example increased $5.37 per barrel since Sept. 24. It's the equivalent of 12.79 cents per gallon (CPG), according to the most recent Lundberg Survey of U.S. fuel markets.

The retail gasoline market has already responded. The two-week price hike is 5.98 cents. It is the biggest two-week jump since last spring.

It appears now that unless oil prices recede quickly, there may be another 5-7 cents coming to the retail pump from crude oil alone. It may turn out to be far more, if station operators are able to recover a big gasoline margin loss that has just occurred.

Retail margin caved 7.58 CPG since Sept. 24, to 22.65 cents.

Margin is down more than a dime in the past month, adding to whatever other upward price pressures are present.

The average pump price is now $1.06.5 above its year-ago point, a discouragement to already flailing gasoline demand.

Although some sources expressed surprise that in its latest meeting OPEC+ kept to its established and modest 400,000 barrels per day output increase in a gradual increase to pre-pandemic oil production, most expected that it would not be altered, and it was not. But a separate element was manifested in recent days that impacted the dramatic oil price increase:

Europe's and Asia's oil demand boost. Europe in particular has been important, fuel switching away from natural gas in favor of oil products, because natural gas prices have been soaring. This may accelerate as temperatures drop. At the root of the fuel switching is the unreliability of wind and solar power in delivering required amounts of energy, especially in Europe.

As Price Futures Group analyst Phil Flynn puts it, the "Green Raw Deal" is a root problem blasting energy costs higher. Europe's fuel switching to oil products is helping boost oil prices and this is visible in U.S. retail fuel pumps. Retail diesel prices according to Lundberg's metro-oriented panel of markets leaped a dramatic 10.52 CPG in the past two weeks, to $3.4543.

Diesel fuel prices hikes are one of the inputs to soaring costs of nearly all goods and services. As Winter looms, demand for light distillates can be expected to grow, adding more price support to diesel fuel.

Birmingham is an example of acutely low regular grade gasoline margin:

On September 24, average margin was a narrow 16.69 cents. Then as the weighted wholesale price leaped up 19.72 cents, but retail lagged with a 9.29 cents increase, Birmingham retailers suffered an average loss of 12.43 cents gal. to a mere 4.26 cents in our October 8 snapshot. The margin pressure in Birmingham is on, as it is all over the country.

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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