CAMARILLO, Calif. -- Between August 24 and September 7, the U.S. retail price of regular grade gasoline increased 7.85 cents to $3.8379 per gallon, according to the most recent Lundberg Survey of approximately 2,500 U.S. gas stations. Retail margin on regular rose but remains anemic at just 9.9 cents per gallon.
Crude oil contributed very little to the nearly eight-cent price hike. West Texas Intermediate (WTI) crude continued to hover a bit above $96 per barrel. The street price rise came instead from the gasoline side, as many U.S. refineries ran at reduced rates of their capacities. Several of them affected by the storm Isaac closed outright. Some non-Isaac-related refinery events included power outages.
Several refineries are now normalizing their capacity use rates, however. Depending on how quickly they come back up, if crude oil prices do not jump, then gasoline prices can retreat. Already the Lundberg diary of wholesale prices shows that Midwest branded rack has dropped:
down six cents per gallon since September 4.
Beyond the immediate horizon there are additional U.S. refining capacity use rate reductions coming from planned maintenance and upgrades, but fall and winter lower gasoline demand will act against the effect on supply.
Futures crude prices did not "care" much about Isaac, but there is no telling how they will respond to possible headlines about far-flung subjects including European money-printing, China's economy and Iran's threatening posture.
Refining margin on gasoline is flush and glowing, up nearly four more cents per gallon since August 24; however, nearly 14% of total capacity is idled thanks to Isaac and other events. No margin at all on those idled barrels of capacity.
Meanwhile U.S. average retail margin on regular grade is still low. After crashing from nearly 13 cents in late July to barely over a nickel on August 10, it was less than seven cents on August 24. Now an expansion of just 3.35 cents during the past two weeks leaves retailers still under pressure.
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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