Trade · 6 pages · 12 min
How crack spreads are a margin
A crack spread is the gap between crude cost and the value of the refined products a barrel yields.
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From the opening
A crack spread is a simple margin: the price of a basket of refined products minus the price of the crude used to make them. It describes the refining margin implied by those prices, not the scarcity of crude by itself and not the retail price of a single fuel. The opening covers products minus crude is the spread, three-two-one is a benchmark slate, and plant costs are still outside.
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Inside
- Products minus crude is the spread
- Three-two-one is a benchmark slate
- Plant costs are still outside
- The ratio may not match the plant
- Where the idea stops applying
- A distinction worth keeping
Sources
- Refining crack spread
- Three-two-one crack benchmark