Why has U.S. gasoline price fallen 4.0% over the past month?
U.S. gasoline is 4.424, down 4.0% over the past 30 days. The obvious read is that the barrel underneath it got cheaper and the pump followed. I checked that first, and it fell apart immediately.
WTI crude is 100.61, up 9.2% over the same 30 days. Brent is 109.7, up 6.4%. The raw material under every gallon rose while the pump price fell. Whatever pulled retail gasoline down, it was not the cost of crude.
So I went down a layer, to the wholesale gasoline that retailers actually buy. RBOB is 3.106, down 13.4% over 30 days, off a 30-day high of 3.587 to a low of 2.839. Wholesale gasoline fell more than three times as hard as the pump. The fall is real, and it starts in the wholesale product market, not at crude and not at the station.
That split, crude up and product down, has a direct reading in the refining margin. The 3:2:1 crack spread is 52.79, down 22.36 over 30 days. The crack is the rough gap between what a refiner pays for crude and what the finished products fetch, and it compressed hard this month. Crude got more expensive to buy, gasoline got cheaper to sell, and the distance between the two closed. For a refiner, that is a thinner month per barrel than the one before it. The operators running those units took the squeeze from both ends of the same move.
The piece that kept me reading was the gap between the two gasoline numbers. Wholesale down 13.4%, retail down 4.0%. Wholesale fell by roughly three times the pump. When the input to a station drops much faster than the price on the sign, the street margin between them widens, at least for a while. Retail prices are sticky on the way down, they always have been, and this month the stickiness worked in the retailer's favor. A marketer who bought product this month at falling wholesale and sold it at a pump that eased only 4.0% earned a wider spread on each gallon moved. For the retailer, this looks like a good month, earned the ordinary way, by buying lower and selling into a price that had not caught up yet.
I wanted to know whether that pattern held across the barrel, so I checked diesel. U.S. diesel is 6.276, down 3.9% over 30 days, almost the same pump move as gasoline. The diesel retail-wholesale spread tells a different story. It is 1.356 now, down 0.283 over 30 days. The gasoline story this month is a widening street margin, and the diesel spread went the other way and narrowed. Diesel retail gave back ground against diesel wholesale, so the diesel marketer's cushion is thinner than it was 30 days ago while the gasoline marketer's looks wider. One company selling both fuels saw them move in opposite directions this month. That is a reason not to assume the whole forecourt is having the same month.
The reporting does not hand me a clean cause for the wholesale gasoline drop. The wire has December WTI trading near $99, opening at $99.04, rallying to $101.37, breaking to $95.25, then recovering, with the hardest selling coming on peace-talk headlines after Iran's president discussed mediation. That is a crude market pulled both ways by the Middle East, and it is consistent with crude holding near $100. None of it explains gasoline product falling 13.4% while that crude rose. The product leg looks like its own move, likely the demand and refining-run side of the season rather than anything coming off the crude tape.
Put the pieces together and one line holds. The pump's 4.0% fall did not come from cheaper crude, because crude rose on both benchmarks. The fall originated in wholesale gasoline, which dropped 13.4%. Refiners carried a compressed crack this month, 52.79 against a level 22.36 higher 30 days ago, and gasoline retailers who held the pump near its old level while wholesale fell saw their per-gallon spread widen in the gap. What I cannot tell you from this data is the single reason RBOB fell against a rising barrel. It might be softer demand or refining runs catching up, and it might be the product market pricing a calmer forward curve into gasoline faster than into crude. This data shows me how the move broke across the business, not what set it off.
For a fuel operator, the useful part is how the month split by business. Refiners took a thinner margin, and the compression showed up in the crack, not in the retail book. Gasoline marketers at the street got a wider spread from the slow pump against fast-falling wholesale, and that spread should close as retail catches down to wholesale, so it is a timing gain, not a permanent one. Diesel ran the opposite way: that spread narrowed this month, and the gasoline tailwind is not yours. The one number I would not lean on is retail gasoline as a read on crude. This month those two went opposite ways, and anyone pricing off the assumption that the pump tracks the barrel got the direction backwards.
What to watch from here: whether retail gasoline catches down to wholesale and closes the street spread, and whether the crack stays compressed or refiners get their margin back. Those two tell you if this month's split holds or reverses.
And that was just the data. See you tomorrow.