crack

Yesterday we learned that Gulf Coast diesel cracks (margins over crude) averaged $12.88/Bbl since August 2010 (read it here if you missed it). The result has been a Gulf Coast diesel-refining boom. Diesel production to feed this boom comes from refining conventional domestic and imported crude supplies that currently feed Gulf Coast refineries. Today we discover how new supplies of unconventional shale crude will force Gulf Coast refineries that process these light sweet crudes to kick their diesel crack habit. 

Gulf Coast diesel cracks (margins over crude) have averaged $8/Bbl more than gasoline for the past two years. As a result, Gulf Coast refiners have been producing more diesel than gasoline for the first time since records began. US demand for diesel has remained flat but exports have boomed. Diesel has been a shining light for US Gulf refiners at a time when their colleagues on the East Coast and in Europe are heading for the exits. Today we examine the diesel boom and where it is headed.