CAMARILLO, Calif. -- The U.S. average regular grade at retail dropped 9.43 cents in the past two weeks, to $2.9769, according to the most recentLundberg Survey of approximately 7,000 U.S. gas stations. This reverses the rise of approximately that amount during the prior three-week period.
Three causes: Slightly lower oil prices, refiner margin loss, retailer margin loss. Refiners and retailers both gave up about 2 cents per gallon; oil brought the other nickel.
But retailers were giving back some of their earlier nice gains [image-nocss] and their average margin sits two cents above their average for all of 2007. The refiner margin loss, meanwhile, puts theirs at just half their 2007 level.
When gasoline demand departs its usual January doldrums, rising demand will meet up with powerful refiner margin pressure. Barring an oil price crash, retail prices will then climb.
Since January 11, most of the price cutting took place in the West, as California retailers passed through big wholesale price cuts from swollen supply. Los Angeles, the nation's biggest gasoline market, weighs heavy in national averages. PADD 5 retail price dropped 14 cents per gallon, and margin shrank four cents in the past two weeks. But at 17 cents per gallon that margin (weighted for DTW, branded and unbranded rack) is currently the highest among the regions. The West will be closely watched as seasonal gasoline demand wakes up, for hints of hoped-for overall U.S. gasoline demand growth in 2008.
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