Crude Oil Jitters

Pump prices, retail margin edge up, says Lundberg

Published in CSP Daily News

CAMARILLO, Calif. -- After dropping nearly 12 cents on average between July 26 and August 23, the U.S. average retail price of regular grade gasoline advanced 2.61 cents per gallon, according to the most recent Lundberg Survey of approximately 2,500 U.S. gas stations.

This advance is from a crude oil price rise, adding to the risk premium built in on Syria jitters, and from support from market perception that U.S. monetary policy will not soon change much. Since benchmark oils rose far more than retail gasoline did, and since U.S. refiner margin on gasoline is now severely squeezed, it would appear that pump prices will continue climbing.

However, that isn't a sure thing. In fact, pump prices might soon resume their slide down. This would happen if the oil market "thinks" that a strike on Syria has been canceled. Right now, the futures market "thinks" that crude will drop $1 per barrel soon, which would equate to a two-cents-per-gallon decline. Also exerting a pull down on retail gasoline price is the continuing aggressive gasoline production by U.S. refiners, and continued lower prices for renewable fuels' sales mandate credits.

Favorable for consumers and for sales, the current retail gasoline price sits 25 cents per gallon below its year ago level. Retailer margin on regular grade has recovered to a comfier 18.4 cents per gallon. Year to date, retail margin is slightly ahead of what it was during full-year 2012.

Camarillo, Calif.-based Lundberg Survey Inc. is an independent market research company specializing in the U.S. petroleum marketing and related industries.

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