ST. PETERSBURG, Fla. -- Fuel margins remain significantly higher this month after rising nearly 65% year over year during the month of October, according to Raymond James' C-Store Monthly Grab-N-Go research note for November.
"We expect convenience store operators ... benefited significantly as both gasoline and diesel costs fell nearly every day through October and fuel margins reached their highest monthly average since October 2008," St. Petersburg, Fla.-based Raymond James reported. "Wholesale costs for gasoline and diesel remain on the decline [through early November]."
Based on industry data from OPIS, national retail fuel margins for regular unleaded gasoline averaged 27.9 cents per gallon (CPG) for the month of October, up about 11 CPG from October 2011. The increase in margin comes on the heels of declining wholesale prices. Retail prices dripped to an average $3.51 per gallon at the end of October, down 28 CPG from Sept. 30, according to the report.
"Though it's still early in calendar 4Q and fuel margins remain extremely volatile on a short-term basis, industry data implies upside to our margin estimate," the report stated.
Meanwhile, Raymond James reported that fuel demand "remains sluggish" with data from the Federal Highway Administration showing miles driven grew 1.2% year over year for the month of August.
"Looking toward September and October, the year-over-year percentage change in the national price for gasoline has a high inverse correlation (approximately 85%) with consumer demand/miles driven," the report stated. "As such, we expect miles driven nationally were under pressure year over year in September as fuel prices rose through the month and averaged 8% higher year over year, though demand in October likely improved following some price relief."