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The crack spread is a proxy refining margin: for a 3-2-1 crack, three barrels of crude yield two of gasoline and one of distillate, and the spread is product revenue minus crude cost divided by three. Gallons are converted at 42 per barrel. It ignores operating cost and the actual product slate but tracks refining economics closely.
3-2-1 crack spread
Spread = (2 x gasoline price x 42 + 1 x diesel price x 42 - 3 x crude price) / 3
Gasoline demand peaks in the driving season while refinery capacity is fixed, so gasoline cracks strengthen. Distillate cracks typically strengthen in winter with heating demand.
No. It excludes energy, catalyst, labour, maintenance and the value of by-products, and assumes a fixed yield. Actual refinery net margin is usually several dollars per barrel below the crack.