After dramatic increases following the Russian invasion of Ukraine, fuel prices in the Philadelphia area appear to have taken a break this weekend, dropping a penny a gallon in southeastern Pennsylvania and of 4 cents in South Jersey.
The average price of a gallon of unleaded gasoline in southeastern Pennsylvania was $4.47 Saturday, down 1 cent from Friday. The price was up 73 cents from a month ago and $1.48 from a year ago, according to AAA.
In South Jersey, the average price was $4.26 a gallon, down 4 cents from Friday. The price is up 79 cents from a month ago and $1.41 from a year ago. New Jersey charges 42.4 cents per gallon in fuel taxes and Pennsylvania charges 57.6 cents, which explains some of the difference between the two states.
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It was the second day of lower gasoline prices in the region after prices soared more than 30 cents per gallon earlier in the week, according to AAA. Nationally, gasoline averaged $4.33 a gallon on Saturday, up $1.49 from a year ago.
Philadelphia-area diesel prices fell slightly from all-time highs set on Friday, according to AAA.
The average price of a gallon of diesel in southeastern Pennsylvania fell 2 cents to $5.35 on Saturday and 7 cents to $5.07 in Camden, Burlington and Gloucester counties. (New Jersey charges a 49.4 cent tax on a gallon of diesel and Pennsylvania charges 74.1 cents per gallon, the highest diesel tax rate in the nation.)
The recent spike in retail prices has caused a wave of consumer outrage on social media on the gouging. Tom Kloza, global head of energy analysis for the Oil Price Information Service, said exploration companies and refiners are doing well, but smaller retailers aren’t necessarily benefiting.
“The public thinks gasoline retailers do remarkably well when prices go up, but the reverse is true,” Kloza said. “Retailers have their big sleeves when wholesale prices crash.”
Most fuel marketers price gasoline around 50 cents above wholesale cost, but with rapidly changing market prices, the seven-day moving average margin for retailers is around 30 cents. the gallon, Kloza said. This does not include delivery costs, which are increasing, and station operating costs. Credit card fees alone are about 3%, or 12 cents per gallon.
A high-volume retailer, such as Wawa, Sheetz or Costco, will typically receive multiple deliveries of gasoline each day, so its retail price can nearly track the wholesale cost, Kloza said.
But a small retailer who sells about 90,000 gallons a month might get delivery every three days. “If you’re a small retailer and you mistimed your purchase, as some have, you may have paid well over $4 a gallon for delivery to your station.” said Klosa. “If you guessed right, you may have paid less than $3.50 a gallon.”
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Fuel prices in Philadelphia have more than doubled since bottoming out in April 2020 during the pandemic lockdown. They rose steadily through the last half of 2020 and all of 2021, but have skyrocketed since Russia’s invasion of Ukraine on February 24. Markets were rattled by the prospect of disruption in energy flows from Russia, a major supplier of oil and gas, especially to Europe.
Those concerns appear to have been fully priced into the market following President Joe Biden’s announcement on Tuesday to ban all imports of Russian crude oil and petroleum products into the United States in response to bipartisan calls from Congress. Russian imports represent a small percentage of US oil and petroleum consumption.
The price of crude oil, the raw material for gasoline, peaked on Tuesday at nearly $124 a barrel before collapsing in the following days. The price of benchmark West Texas Intermediate crude closed at $109.09 a barrel on Friday, up $3 a barrel from the previous day but still 14% below its peak on Tuesday, according to MarketWatch.
The US Energy Information Administration forecast on Wednesday that crude oil prices will remain above $100 a barrel this year.