CAMARILLO, Calif. — Retail margin fell eight cents per gallon in the past two weeks but is still historically attractive on average, according to the most recent Lundberg Survey of approximately 2,500 U.S. gas stations. Refiners are cranking out product with zeal while commencing the seasonal change to lower-cost, higher-vapor-pressure winter gasoline. As expected two weeks ago, the national pump price has slipped the better part of a dime.

The weighted average national retail price of regular grade gasoline is now $2.3484 per gallon, down 9.35 cents in two weeks, the lowest since mid-February. It has tumbled nearly 36 cents over five weeks. Versus one year ago, the price is at an eye-popping discount of $1.03 per gallon.

Since late August, crude oil prices have been rising moderately, so producers can’t be thanked for all this gasoline price cutting. In fact, it was downstreamers–first mostly U.S. refiners during the prior three-week period and then mostly U.S. retailers during the latest two weeks–handing over big chunks of their gasoline margins to customers.

Both downstream margins had been briefly extra wide, and they have now forfeited that bounty as they slash prices to chase strong motorist demand.

A little of the latest nine-cent drop came from refiner shift to winter-grade product.

Even though refiner and retailer margins on gasoline have been cut deeply, historically they aren’t hurting. Retail margin exceeds 22 cents on regular. For now at least, downstream margins are not squeezed so as engender upward price pressure.

Contrary to anti-industry myth, downstreamers from refineries to gas station operators are enamored of price-cutting and frequently do it ’til it hurts. Motorists seem to be cheering, with 2015 gasoline demand on track to break the all-time record high with 2.6% growth over 2014 demand. Where and when they can, to the degree margins allow them to, refiners and retailers are minimizing price for sake of sales.

Although rack prices may now have bottomed, they may instead just be paused. From here, barring a roaring crude oil price recovery, fabulously flush gasoline supply is likely to push prices lower. Stocks and output are high. Despite some refineries already commencing seasonal maintenance projects, the national capacity use rate is nearly 92%.

And as more areas of the country switch to winter grade, shrinking production cost some and also allowing for a bit more supply, prices will be pushed a little lower than they otherwise would be. This price crash environment, wherein margins are buoyantly good and demand is rising victoriously, is rewarding everybody below the wellhead.

Camarillo, Calif.-based Lundberg Survey Inc. is an independent market research company specializing in the U.S. petroleum marketing and related industries.

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