Yeah, right, the weak gasoline market. Tell that to an American who in some cases might be paying $4/gal for gasoline. Or in the UK, where the tax-loaded retail price, combined with the weak dollar, is now in excess of $10/gallon.
But we have to keep pointing out to everyone that while the focus may be on gasoline, it's diesel fuel and its fellow distillates that are one of the key drivers pulling this market higher.
We've written about this previously: here and here. The value of gasoline relative to crude has been sliding, and it's been the diesel market that is the primary non-financial factor pulling petroleum markets higher.
Today marked a new nadir, at least for now; in this market, talking about rock-bottom or ceilings is a fool's game, because every day brings something either never seen, or not seen for years. So the surprise for March 12 is that spot gasoline prices for gasoline barges delivered in the Amsterdam/Rotterdam/Antwerp region fell to a value less than Brent crude. What this means is that if you took a barrel of crude, put it through a refinery, got 100% gasoline and sold it into the ARA market, you'd lose money. Platts' records are not showing any similar occurence in recent history.
Of course, if you could run that crude and get 100% diesel -- specifically, 0.1% gasoil, also in the ARA market -- you'd make $35/barrel, which is about 83 cts/gal.
The general media focus is on gasoline, which makes sense; that's what people use. But it was hard not to laugh this morning when The Barrel was watching a television news clip about higher gasoline prices, and there was the usual shot of a retail station's gasoline price sign. It showed regular at $3.45, midgrade higher and premium higher still. And on the bottom was the station's price for diesel, and it was about 50 cts higher than the price of regular gasoline. The reporter never commented on the diesel price.
Negative gasoline margins in March. Who woulda thunk it?
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