The U.S. downstream needs to catch a break on gasoline: Refiners and retailers both lost margin.
Refiners, [image-nocss] already sacrificing by running at just 84% of capacity, failed to pass through their higher oil buying prices. What they did pass through into wholesale gasoline was not fully passed through by retailers to consumers.
For example, Midwest unbranded rack regular grade bumped up several times since March 18, to 307.58 cents per gallon on April 1, and by April 8, to 319.59 cents per gallon, leaving little or no retail margin in several markets on that date.
Neither refiners nor retailers can eat these losses for long. There is another dime at least to hit pump prices if crude oil prices do not retreat quickly.
U.S. gasoline demand is falling at these prices, and this is bad news for the U.S. downstream. Relief for the downstream and consumers must come from crude. One or more of these three crude oil price factors would have to lose strength in order for retail gasoline prices to stop rising or to fall: Third World oil demand growth to cease; Federal Reserve policy that is weakening the dollar and effectively hiking oil prices would cease; and upheaval in the Middle East/North Africa, especially Libya suffering a civil war, would ease.
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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