Crack Spread
The margin between crude oil and refined products (gasoline, diesel) — a proxy for refining profitability and a leading energy-equity signal.
Definition
The classic 3:2:1 crack spread = (2 × gasoline + 1 × distillate) − 3 × crude, all per barrel. It captures the refiner's margin after processing one barrel of crude into roughly two parts gasoline and one part distillate.
Crack spreads track product demand independently of crude prices, making them a cleaner read on driving-season demand, freight demand, and refining capacity utilization.
Public research record
Research framework · page evidenceCompleted application: Crack Spread
Refiner equities (XOM, VLO, MPC) trade much more closely with cracks than with WTI alone. Crack spreads also lead retail gasoline prices by ~4 weeks.
| Type | Claim | Scope |
|---|---|---|
| Release fact | The margin between crude oil and refined products (gasoline, diesel) — a proxy for refining profitability and a leading energy-equity signal. | Commodities |
| Release fact | Mid-2022: distillate crack spreads exceeded $60/bbl on diesel shortages — refiner margins printed record highs while crude was off its peak. VLO outperformed XOM materially. | Published example |
Countercase, invalidators, and sources
The relationship is conditional: another driver can dominate the same asset over the selected horizon.
- · The underlying observation changes materially.
- · The selected asset has no measurable exposure to this mechanism.
Why it matters
Refiner equities (XOM, VLO, MPC) trade much more closely with cracks than with WTI alone. Crack spreads also lead retail gasoline prices by ~4 weeks.
Worked example
Mid-2022: distillate crack spreads exceeded $60/bbl on diesel shortages — refiner margins printed record highs while crude was off its peak. VLO outperformed XOM materially.