California Gasoline Retail Margin Quick to Rise, Slow to Drop
January 10, 2020
By Kendra Seymour
In the course of our work, and due to our own curiosity, Stillwater tracks the California gasoline market. We thought our findings might be interesting to our readers as well!
In our latest review of the data, we see that the strength of the retail margin (retail less taxes less climate change costs less spot) relative to the refining margin (spot less crude) remains impressive. Figure 1 below shows the Refining and Retail margins as net of climate change costs. We note that retail prices continue to respond quickly to increases in the spot price, but they respond more slowly to decreases in the spot price.
Figure 2 breaks out the changes in the various pieces of the price of gasoline since 2010. Despite a fall over the period in crude oil prices, the Retail gasoline price has grown about 50 cents per gallon (cpg). This figure highlights the increase in Marketing Gross Margin (GM) – retail price less spot price and less taxes and climate change costs – of about 40 cpg since 2010. Note: In this figure, the Marketing GM also includes the Dealer GM. The climate change costs, made up of Cap & Trade and the Low Carbon Fuel Standard, have increased from zero to 30 cpg between 2010 and 2019.
That’s our quick and dirty review of the trends. Are you looking for a deeper dive, or do you have questions about retail margins or gasoline pricing in California? Drop us a line!