Few consumers have any sympathy for oil refiners these days. The contrast between motorists' sullen resignation and the jubilance of oil company shareholders has been stark. The latest jump in crude oil prices, however, seems to have caught the big boys flatfooted.
Refining margins have been whacked as crude oil barrel prices shot past the century mark over the past couple of weeks. Margins, measured by the "crack spread," are now, in fact, at new year-to-date lows.
Refining, or "cracking" crude oil yields a number of distillates, of which gasoline and heating oil are the most marketable. An efficient refiner can crack three barrels of crude into two barrels of gasoline and a barrel of heating oil.
At the beginning of the year, when April NYMEX crude could be bought at $98.74 per barrel, the 3:2:1 crack spread stood at $45.04, or 15.2%.
At last look, however, as April crude topped $104 in NYMEX trading, oil refining margins had slipped to $31.99, or 10.2%, per barrel.
You can enjoy this little bit of schadenfreude when you next fill up.