CAMARILLO, Calif. — In the two weeks from June 10 to June 24, the national average retail price for regular gasoline fell 4.48 cents, to $5.0542, according to the most recent Lundberg survey of U.S. fuel markets. The cause is a dramatic downward correction in prices in crude oil markets, translating into price reductions at the rack by refiners and coming piecemeal to street level. The last drop in prices at the pump was nine weeks ago, and it was followed by price increases of more than 86 cents through June 10 as oil prices rebounded.
That doesn’t seem very likely this time around, as oil and refined product buyers around the world are inundated with indications that a recession is underway. Some voices warn that he is already there.
OPEC+ appears unable to dramatically increase oil production, keeping oil supplies tighter than they otherwise would be. And a sharp cut in supply due to Russia’s embargo is made less effective by enthusiastic lifts from non-participants such as India and China. But at the same time, fear of demand has put oil and commodity markets on notice.
In the United States, currently, the one-year retail price premium is $1.9026 per gallon, making each 15-gallon fill more expensive by an average of $28.55.
U.S. refiners lost much of their gasoline margin as they raced to ride through oil price declines. Price declines on the rack outpaced those in the futures market. Thus, on average, wholesale price breaks allowed retail prices to decline slightly.
For their part, dealers and other gasoline retailers are having a moment: the margin has fallen from 21.20 cents to 61.74 cents in the past two weeks, a level not seen since the spring of 2020. That’s thanks the timing and the fact that for most of the year the retail margin has not been impressive, and it cannot last: the whole oil chain is facing a brutal demand reaction. Oil producers, refiners, product wholesalers and retailers are driven to chase sales.
Another penny or more of retail pump price relief may be imminent, but thanks to upstream constraints, it doesn’t look set to become a major crash.
Click here to view previous reports from the Lundberg Inquiry CSP Daily News.
Trilby Lundberg is the publisher of the Lundberg Survey of US Fuel Markets. Lundberg Survey Inc. is based in Camarillo, California.
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