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Gasoline crack spreads and free lunches

January 14, 2009

Crack Spread

Crack Spread

Rocky is always on the hunt for the proverbial free lunch. He can often be found trolling the isles of Costco … eating free food samples.

He wanted to share that (until very recently), there was a “free lunch” in the gasoline crack spread. The gasoline crack spread is the price difference between gasoline and crude oil. The price difference is the refiners’ profit. He apologizes for being late to share this with his readers, but he didn’t have his own blog until last night. He says that refiners break-even with the crack spread around $4 per barrel, and although he paid $1.70 for the June crack spread (last price=$4.40), he still likes the idea. See: Rocky’s Definitions: Rocky II

Rocky reasons that if the June crack spread goes negative, it’s as if the refiners are PAYING HIM to back up his pickup truck and fill his rusty gas cans. It happens sometimes. But then he sometimes gets food poisoning at Costco too….

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  1. February 12, 2009 at 8:12 am
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