Since January, the crude-to-gas ratio — defined as the price of WTI crude oil divided by the price of Henry Hub natural gas — has increased by about 140%, rising from roughly 15x to 37x. One result of this shift in relative pricing is a sharp increase in the margin for using ethane as a feedstock to produce ethylene and other petrochemicals in Gulf Coast steam crackers. That margin has climbed by approximately 150%, from about 11 cents per pound of ethylene produced to around 27 cents per pound.
As shown in the graph below, the crude-to-gas ratio (blue line, left axis) typically tracks closely with the ethane petrochemical margin (orange line, right axis). This relationship reflects the underlying price drivers: ethylene values are heavily influenced by crude oil prices — which have risen about 70% since January — while ethane prices are more closely tied to natural gas, which is down roughly 35% over the same period. As a result, both the crude-to-gas ratio and the ethane petchem margin have moved higher together in recent months, with crude rising amid the Iran war and gas declining due to seasonal factors and oversupply.
