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During the second half of 2014, a rapid decline in crude oil prices had consumers rejoicing at the gas pump. What they may not have realized though, is that gasoline stations also benefited from the decline in crude oil prices. During this period, the Producer Price Index (PPI) for automotive fuels and lubricants retailing showed a sharp rise in retail margins, peaking in December 2014. However, in early 2015, as crude oil prices stabilized at a new lower level, retail margins for gasoline declined.
The PPI for automotive fuels and lubricants retailing measures the average change in margins that gas stations receive for selling products such as gasoline and motor oil. Margins are calculated by subtracting the price at which retailers purchase fuel (the wholesale price of fuel) from the price at which they sell it (the retail price of fuel), reflecting the price for the value added through retail distribution.
Month | PPI retail automotive fuel margins, 3-month moving average |
West Texas Intermediate spot oil |
Average retail price for all grades of gasoline |
---|---|---|---|
Jan 2011 |
100.0 | 100.0 | 100.0 |
Feb 2011 |
100.2 | 99.3 | 103.7 |
Mar 2011 |
101.5 | 115.4 | 114.8 |
Apr 2011 |
103.5 | 122.8 | 122.4 |
May 2011 |
115.8 | 113.2 | 125.8 |
Jun 2011 |
128.6 | 108.0 | 118.6 |
Jul 2011 |
130.6 | 109.1 | 117.7 |
Aug 2011 |
129.8 | 96.8 | 117.4 |
Sep 2011 |
128.4 | 95.9 | 116.5 |
Oct 2011 |
129.3 | 96.8 | 111.4 |
Nov 2011 |
127.8 | 109.0 | 109.4 |
Dec 2011 |
123.3 | 110.5 | 105.7 |
Jan 2012 |
120.5 | 112.4 | 109.3 |
Feb 2012 |
112.9 | 114.6 | 115.6 |
Mar 2012 |
107.5 | 119.1 | 124.1 |
Apr 2012 |
114.0 | 115.9 | 125.7 |
May 2012 |
123.5 | 106.2 | 120.4 |
Jun 2012 |
133.3 | 92.3 | 114.2 |
Jul 2012 |
132.6 | 98.6 | 111.1 |
Aug 2012 |
121.8 | 105.6 | 120.1 |
Sep 2012 |
109.3 | 106.0 | 124.2 |
Oct 2012 |
108.2 | 100.4 | 121.1 |
Nov 2012 |
120.7 | 97.0 | 111.8 |
Dec 2012 |
138.9 | 98.5 | 107.4 |
Jan 2013 |
139.3 | 106.3 | 107.7 |
Feb 2013 |
132.0 | 106.9 | 118.7 |
Mar 2013 |
123.0 | 104.2 | 120.0 |
Apr 2013 |
131.1 | 103.2 | 115.6 |
May 2013 |
124.3 | 106.0 | 116.7 |
Jun 2013 |
125.2 | 107.4 | 117.2 |
Jul 2013 |
125.2 | 117.4 | 116.3 |
Aug 2013 |
141.0 | 119.5 | 115.8 |
Sep 2013 |
138.2 | 119.2 | 114.5 |
Oct 2013 |
133.2 | 112.8 | 108.6 |
Nov 2013 |
127.5 | 105.3 | 105.5 |
Dec 2013 |
127.0 | 109.5 | 106.6 |
Jan 2014 |
124.0 | 106.1 | 107.8 |
Feb 2014 |
118.9 | 113.1 | 109.1 |
Mar 2014 |
116.7 | 113.0 | 114.5 |
Apr 2014 |
113.3 | 114.5 | 118.6 |
May 2014 |
119.0 | 114.6 | 119.1 |
Jun 2014 |
123.3 | 118.6 | 119.6 |
Jul 2014 |
135.3 | 116.2 | 117.2 |
Aug 2014 |
143.5 | 108.3 | 113.2 |
Sep 2014 |
145.0 | 104.5 | 110.7 |
Oct 2014 |
151.1 | 94.7 | 103.4 |
Nov 2014 |
152.4 | 85.0 | 95.2 |
Dec 2014 |
170.4 | 66.5 | 83.6 |
Jan 2015 |
170.7 | 53.0 | 70.1 |
Feb 2015 |
158.9 | 56.7 | 73.1 |
Mar 2015 |
146.6 | 53.6 | 80.9 |
Apr 2015 |
138.4 | 61.1 | 81.2 |
May 2015 |
139.5 | 66.5 | 89.0 |
Jun 2015 |
135.6 | 67.1 | 91.6 |
From January 2011 to June 2015, a 3-month moving average used to reduce volatility in the margin-based producer price index for automotive fuels and lubricants shows a moderate inverse relationship between retail margins and prices for crude oil and gasoline. During periods of falling prices for crude oil and retail gasoline, declines in crude oil generally outpaced decreases in selling prices at the pump, resulting in a jump in retail margins. When prices for crude oil and retail gasoline rose, retail margins often declined. From January 2011 through January 2014, retail margins returned to relatively similar levels (with a slightly increasing long-term trend) despite large month-to-month movements. However, between June 2014 and January 2015, margins for automotive fuels increased while prices for both crude oil and retail gasoline declined.
These data are from the Producer Price Index program. For more information, see the Beyond the Numbers article, “As crude oil plunges, retail gasoline margins spike, then retreat” by Jeff Rubenstein and Michael Conforti.
Bureau of Labor Statistics, U.S. Department of Labor, The Economics Daily, As crude oil plunges, retail gasoline margins spike, then retreat at https://www.bls.gov/opub/ted/2016/as-crude-oil-plunges-retail-gasoline-margins-spike-then-retreat.htm (visited October 14, 2024).