The ‘Crack Spread’ Is Going to Make Your Life Unpleasant

Investment Analysis Clubs Macro Economic Trends and Risks
1

The “crack spread” is the ratio of gasoline to diesel when you send a barrel of crude oil through a refinery. You typically get twice as much gasoline than diesel, but that varies with the quality of the crude oil.

It’s within Iran’s power to give us $15/gal diesel on the West Coast if they want to punish Trump and Netanyahu to the max.

{{ The world isn’t running out of oil. It is running out of places to turn that oil into fuel. Which means the price of refined products such as gasoline will remain high. }}

https://www.nytimes.com/2026/08/19/opinion/gas-prices-crude-oil-diesel.html

intercst

4 Likes
2

I include the crack spread in the weekly Control Panel.

Wendy

3 Likes
3

That’s a chart of the price of gasoline.

Here’s the “3-2-1 crack spread”

Where it gets tricky, is when a distillate like diesel is in short supply. You would have to make more gasoline to get the diesel you want, but that reduces gasoline prices. So the refiner is going to charge you even more for the diesel.

US West Coast gets most of it’s refined products from the Middle East.

intercst

4

what about all the cheap Venzualen oil we are getting?

1 Like
5

<< plankton89: what about all the cheap Venzualen oil we are getting? >>

Full of sulfur. Expensive to refine. No pipeline from Gulf Coast refineries to the West Coast.

That’s why getting refined products from the Middle East is usually cheaper on the West Coast.

intercst

1 Like
6

Not to mention that California is not what one would call “refinery friendly” (or oil production friendly either).

DB2

2 Likes
7

Say it again:

More agricultural fertilizer stock (Sulphur)
Significant changes in regional pricing for fuels an distillate products.

8

Trump is stopping an oil glut. He is doing so profitably on purpose. Bolstering inflation so we do not have deflation.