Lundberg in

CSP, May 23, 2022:
Pump Price Screams 33 Cents Higher to $4.71
For summer 2022, stars aligning to ugly

CSP, May 9, 2022:
Petroleum Price Hikes, Nervous Markets
Low retail gasoline margin unsustainable

CSP, April 25, 2022:
Pump Price Drops 3 Cents
Retail margin drops 10 times that amount

CSP, April 11, 2022:
Oil and Gasoline Prices Drop, Margin Climbs
Has spring demand been flipped on its head?

CSP, March 28, 2022:
Pump Price Takes a Baby Step Down
Retail margin crashes

CSP, March 14, 2022:
Price Record, Speed Record
Oil market crisis ignites gasoline, diesel prices

CSP, May 23, 2022:
Pump Price Screams 33 Cents Higher to $4.71
For summer 2022, stars aligning to ugly

CAMARILLO, Calif. — Crude oil prices climbed higher in the past two weeks, but gasoline leaped several multiples of that for its own reasons. West Texas Intermediate (WTI) gained about 8 cents per gallon (CPG) equivalent during the two weeks, according to the most recent Lundberg Survey of U.S. fuel markets; an average of WTI and Brent moved up less.

Gasoline got de-emphasized as refiners are being forced to tilt to diesel fuel output to alleviate shortage of that product, so already shallow gasoline stocks are diminishing further. And although the U.S. refining capacity use rate rose an aggressive 3.4 points to 91.8%, that does not cut it in today’s scene. Further, in the past two years, there are eight fewer U.S. refineries making gasoline—some closed, period, and some from converting to soy-based diesel production plants answering the call of subsidy, making the base under that 91.8% less impressive.

On top of those gasoline market factors is the start of a big fear of big gasoline shortage if European refiners cannot supply gasoline to the United States, especially the non-refining region of the Northeast, in the volumes normally received during the country’s biggest demand months. Coming in last on the list of gasoline’s reasons for price jumps is the shift to costlier summer blend lower vapor pressure, yet it does add a bit to price.

The futures markets know that refiners are shy about investment for capacity growth, as they’ve been put on notice by government their fossil fuels production is unloved.

What is not among gasoline’s latest price hike factors is a spike in U.S. gasoline demand, which is in fact seasonally weak thanks to such high prices.

Since wholesale price hikes have paused in some markets and reversed to price cuts in others in latest days, assuming oil price hike take a pause for now, retail gasoline price increases in the near future may be small or nil. But perhaps just briefly.

Developments around the world affecting crude oil supply and demand are pointing to oil price climbs sometime soon. These include China reopening, production in Libya, Russia and other countries faltering, and the unfolding embargo scene curtailing flows of Russia’s oil A logical assumption is that no powerful reversal in U.S. energy policies is imminent that would give heart, and maybe even help, to U.S. producers to add lots of domestic barrels. If oil gains another 10 bucks per barrel and if gasoline and diesel supply problems persist or worsen, then summer 2022 pump price hikes may look a lot like the extreme one just seen.

The past two weeks brought another gain for U.S. refining margin on gasoline, and a recovery for retail gasoline margin. But the latter’s expansion of 14.3 CPG is only two pennies better than it was a month ago, and the current 27.82 cents on regular grade is too low for sustainable health.

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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