Gas Glut Continues But even lower prices feel high
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CAMARILLO, Calif. -- The U.S. average regular grade retail gasoline price fell 3.89 cents per gallon in the past two weeks to $2.5964, according to the most recent Lundberg Survey of approximately 5,000 U.S. gas stations. This amounts to a drop of nearly 9 cents over the past six weeks.
The price doesn't look high, but it feels high: an amazing 93 cents higher than a year ago, since last year at this time the price finally hit bottom after its record-deep plunge of $2.45 per gallon from its record-high price of more than $4 on July 11, six months earlier.
That 93 cents matters a lot, especially because the unemployment level is far worse than it was back then.
Retail diesel prices are down 2.29 cents in the past two weeks, to $2.8187 per gallon—nearly 25 cents above their year ago level.
There is an oversupply of crude, distillates and gasoline. Assuming continued relative stability for crude oil prices, it will be up to the gasoline glut to decide where gasoline prices go. If refiners scale back operations even more, or the number of unemployed Americans finally stops falling and edges up, then gasoline prices might rise—but without one or both of these, then gasoline price stability over the next few weeks, with small ups and downs but favoring the downs, is probable.
Retail margin swelled as retailers kept, for the moment, about half the wholesale price cut they received. The Dec. 18 U.S. average regular grade retail margin is 14.49 cents. Behind that volume-weighted average, margins fell into these approximate quartiles: 4 to 9 cents; 10 to 14 cents; 15 to19 cents; and 20 to 34 cents.
In the country's biggest gasoline market, Los Angeles, the retail price is $2.8883, wholesale is $2.1525, total tax is 62.07 cents, and margin is 11.51 cents, on a weighted average basis.
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There is an oversupply of crude, distillates and gasoline. Assuming continued relative stability for crude oil prices, it will be up to the gasoline glut to decide where gasoline prices go. If refiners scale back operations even more, or the number of unemployed Americans finally stops falling and edges up, then gasoline prices might rise—but without one or both of these, then gasoline price stability over the next few weeks, with small ups and downs but favoring the downs, is probable.