As crude oil plunges, retail gasoline margins spike, then retreat

January 08, 2016

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.

Producer Price Index (PPI) retail fuel margins 3-month moving average, spot oil prices, and retail gasoline prices, January 2011–June 2015
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.

SUGGESTED CITATION

Bureau of Labor Statistics, U.S. Department of Labor, The Economics Daily, As crude oil plunges, retail gasoline margins spike, then retreat on the Internet at https://www.bls.gov/opub/ted/2016/as-crude-oil-plunges-retail-gasoline-margins-spike-then-retreat.htm (visited September 18, 2019).

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