The retail price is $1.11 lower than its September 12, 2008, level. But such an apparently deep discount is not of very much practical help to the unemployed and under-employed. [image-nocss] The discount, much slimmer of late, seems fated to disappeardue to the steep price crash of last year that is not happening this year. That year-ago price differential has been the only support of gasoline demand as unemployment, whichever way one counts it, continues to mount.
By the time the discount fades away and turns negative, demand will be entering its normal seasonal trough. Year over year too, gasoline demand will likely show shrinkage, recent perishable weekly data showing some growth notwithstanding.
Meanwhile refining margin and retail margin both appear healthyboth on our retail survey data of 9/11 and year-to-date; however, with sales down, the pennies don't do as much good. For refiners, sales have been poor enough to dictate the shutting in of more than 14% of operable capacity. After buying crude and producing gasoline, refiners' margin is less than 37 cents per gallon according to Lundberg's calculations, both now and so far in 2009. For retailers, regular grade brings in more than 12 cents at the moment, and more than a dime year to date. Neither the apparently healthy downstream margins, nor the comparatively low prices to consumers, are generous compensation for lost business.
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