Food & Beverage

Gas prices fail to play nice at start of National Pizza Week

Gas prices sailed back up to their highest levels since mid-March, making for a less than joyful start to National Pizza Week.

Pizza operators may need to sock away a few extra bucks for the increasing cost of deliveries due to higher pump prices. (Photo: iStock)

January 11, 2021 by S.A. Whitehead — Food Editor, Net World Media Group

We are off on this year's National Pizza Week — a made-up holiday to honor the national love affair with its pie paramour — but neither gas prices nor investors in two pizza brands brought very nice gifts to the party. If there was a weekly winner though, it was Papa John's, which saw its stock price bounce nearly $10, from $84.85 Dec. 31 to $93.47, on the heels of a number of analysts expressing their increasingly bullish position on the stock.

Competitor, Domino's Pizza, also gained value during the week, closing up $5.37 Friday at $388.83. Meanwhile, the picture was a little dimmer for Pizza Hut parent, Yum Brands, which dropped $1.41 in price over the year's first trading week to end up Friday at $107.15.

And lastly, Pizza Inn and Pie Five parent company, Rave Restaurant Group, knocked a couple of cents off its Dec. 31 price of 91 cents, closing Friday at 89 cents.

Auto fuel

Gas pumps have started 2021 in a nasty mood, and they're taking it out on consumers a penny at a time. According to the American Automobile Association, the national average price for a gallon of regular last week grew 3 cents to $2.28, its highest average since before lockdowns began last March. That's also 12 cents more than a month ago, but still 30 cents less than a year ago.

Pump prices have increased despite gas demand falling from 8.1 million barrels a day (b/d) to 7.4 million b/d — the lowest level recorded since the end of May 2020 — and total domestic supply increasing by 4.5 million barrels (bbl) to 241.1 million bbl the last week of December, according to the Energy Information Administration.

Domestic crude prices climbing above $50 per barrel and growing total refinery use — up from 79% to 81% in the administration's latest report — have contributed to higher pump prices, AAA said. If crude prices continue to stay above $50 per barrel alongside higher refinery utilization rates, drivers could see pump prices continue to climb, which is unusual given that low winter gas demand typically pushes prices to their lowest point of the year.

In the U.S., states with the steepest price increases last week were West Virginia (up 14 cents), Florida (up 10 cents) and North Carolina (up 8 cents), AAA said. This morning the average price of a gallon of regular was $2.32, up 6 cents from a week earlier.

Mid-grade ($2.65) and premium ($2.92) also gained 6 cents on the week. Finally, at $2.59, diesel fuel saw an even greater weekly increase of 8 cents from the previous week's rate while E85 increased just 3 cents on the week to come in this morning at an average of $2.06.

Cheese

That ultimate pizza topper, cheese, was in fast-forward mode last week, when both barrel and block prices surged higher following an announcement early last week that the governmental food box program would be continued. As a result the weekly average for barrels increased 9 cents to $1.60 while blocks gained an eyebrow-raising 14 cents to close at $1.78, according to the U.S. Department of Agriculture. Barrels closed Friday at $1.65, while 40-pound blocks ended at $1.92.

The U.S.D.A. reports that nationally, cheese producers are busy with mixed cheese inventories from plant to plant. Demand also remained mixed, with foodservice sales struggling as they have been, though retail and pizza cheese-makers relay customers remain active.

Wheat

Wheat prices last week were mixed with some gains in spring wheat contracts. But March Chicago Soft red winter wheat futures fell $6.38, while spring wheat futures gained almost 7 cents to nearly $6.10 on the Minneapolis Grain Exchange. Kansas City March hard red winter futures dropped almost 5 cents to ring in at $5.94.

Natural gas

Natural gas spot prices rose at most locations for the seven days that ended Jan. 6, according to the U.S. Energy Information Administration. The Henry Hub spot price rose from $2.39 per million British thermal units (MMBtu) to $2.70/MMBtu over the same period.

At the New York Mercantile Exchange (Nymex), the price of the February 2021 contract increased 29 cents, from $2.42 per million British thermal units or MMBtu to $2.72/MMBtu last Wednesday. The price of the 12-month strip averaging February 2021 through January 2022 futures contracts climbed 23 cents/MMBtu to $2.84/MMBtu.

The natural gas plant liquids composite price at Mont Belvieu, Texas, rose by 26 cents/MMBtu, averaging $6.50/MMBtu for the period. The price of butane fell 21% as logistical constraints were alleviated, allowing butane prices to return to trend after rapid price increase throughout December. The prices of ethane, propane, isobutane, and natural gasoline rose by 10%, 8%, 8%, and 6%, respectively.

About S.A. Whitehead

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Pizza Marketplace and QSRweb editor Shelly Whitehead is a former newspaper and TV reporter with an affinity for telling stories about the people and innovative thinking behind great brands.