CAMARILLO, Calif. -- The October 6 national average price for self-serve regular is $2.2791, down 14.54 cents over two weeks, according to the most recent Lundberg Survey of approximately 7,000 U.S. gas stations.
That 15 cents is a great slowing from the 24-cent cut during the period two weeks ago. It also makes a total of 75 cents per gallon in cuts over eight short weeks.
The price crash represents the glut of gasoline created by maxed-out refinery runs and imports, [image-nocss] and the slowing of the price cuts shows the glut is being soaked up. From here, many refiners, whose skinnier margins are a disincentive to overproduce, will take off some capacity during work projects preparing for heating oil season, and must shift some focus from gasoline production to distillates. Gasoline imports won't rush in, due to the lower prices. Supply will normalize.
So should demand. After 75 cents cut at retail, gasoline demand growth should be tempted to return, helping to soak up post-summer glut. The latest 15-cent drop might be just the cure for volume doldrums.
Market-follower OPEC, which to shore up the still high oil price from dropping further, is making unintelligible chatter in the press. The Organization of Petroleum Exporting Countries unofficially said that it might have an "extraordinary" meeting soon, it might cut production by one million barrels per day next month below the official quota, which it has unofficially been exceeding or perhaps some of its members will make cuts as individual sovereign nations.
Unless the oil price of oil drops, the gasoline price crash will end quickly. Already since October 4, most unbranded and many branded racks are up in many Gulf Coast markets and the turnaround is rippling up into much of the Midwest as well.Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.