Price to Demand: Come Back! Gasoline price edging up, Lundberg Survey shows
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CAMARILLO, Calif. -- After the U.S. average regular grade retail gasoline price bottomed out at $1.6622 on December 19, an amazing $2.45 per gallon below its July 11 peak, it has risen 19.3 cents, according to the most recent Lundberg Survey of approximately 7,000 U.S. gas stations. The 7.59-cent rise of the past two weeks puts the price at $1.8552, an impressive $1.12 below its year-ago level.
Moderately higher crude oil prices are the prime cause; however, U.S. gasoline demand, still down 06% from a year ago but a far cry from the anguished 3.5% drop of 2008 overall, played a small, helpful role. It is the five-month price crash that has brought gasoline demand back in
sight of breaking even with itself.
Current commentary on the retail price reversal includes the illogical idea that refiners have idled more capacity in order to pull up the price and to profit, while of course idled capacity means sales lost forever. Some observers assume retailers are raking it in, while, of course, fewer gallons need a higher margin in order to get well.
In the distance, world and U.S. economic recovery, petroleum demand recovery, and the effects of OPEC's (mostly Saudi Arabia's) production cuts loom. Until then, absent supply threatening events, further retail gasoline price increases will probably be gradual.
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Current commentary on the retail price reversal includes the illogical idea that refiners have idled more capacity in order to pull up the price and to profit, while of course idled capacity means sales lost forever. Some observers assume retailers are raking it in, while, of course, fewer gallons need a higher margin in order to get well.