Gasoline’s value against diesel started collapsing around August and hasn’t stopped sliding since.

Once the oil industry’s star product, gasoline is now losing oil refineries money in Europe and has plunged in value against diesel, its main competitor.

How did this happen? The simple answer is that gasoline supply has massively outpaced demand. That’s illustrated by data from the US — by far the world’s single largest gasoline consumer — which shows stocks at record seasonal highs since the start of September.

A second issue is the kind of crude oil the world is pumping. Where output is growing fastest, notably in the US, the extra barrels have tended to be lighter and therefore rich in gasoline. By contrast, the supply of diesel-yielding oil from the likes of Venezuela and Iran has been more constrained.

Gasoline’s value against diesel started collapsing around August and hasn’t stopped sliding since. In Asia, Europe and even the US — which consumes over 9 million barrels of gasoline a day — diesel is now around an average of about $70 a ton more expensive.

High stocks and seasonally weak demand are set to keep dragging on gasoline prices, according to Wood Mackenzie Ltd., an energy consultant. And as long as diesel margins remain attractive, refiners will keep running hard and, in doing so, inevitably produce more gasoline, further pressuring margins.

In Europe, gasoline is now worth less than the crude used to produce it — a bizarre scenario last seen back in late 2011. Today in the US, and also in Asia, refiners’ profits from gasoline production have collapsed.

The situation for gasoline has become so bad it’s now practically the same price as high-sulfur fuel oil — a waste product made by refineries that’s normally sold to power generation and shipping industries — flouting market norms. Along with low gasoline prices, recent gains in fuel oil values as global supplies tighten have helped to decimate this spread.

With their star product making a loss and little chance of a rally, refiners are faced with a difficult choice. They could turn off their FCCs (fluid catalytic cracking, a relatively sophisticated refining process that churns out high proportions of gasoline and other light fuels), but potential problems when they restart are likely to scupper that idea. Instead, refiners will be thinking about reducing run rates at these units.

Oil companies rarely comment on such commercially sensitive operational details. But until either supply is reduced or demand picks up, gasoline is set to remain refiners’ problem child.