Record-High 'Crack Spread' Drives Up Diesel, Jet Fuel Prices

The 'crack spread' is a term that may sound like industry jargon, but it's having a significant impact on Canadians. It refers to the gap between what refineries pay for crude oil and what they sell their finished fuel products for.

When the crack spread widens, refiners make more profit, which can lead to higher pump prices for diesel and jet fuel. However, gasoline prices are rising at a slower pace. The 3-2-1 crack spread, which is the benchmark used by refineries across North America, recently reached a record high of $69 per barrel.

A year ago, refineries took about 35 cents out of every litre of gasoline sold in Alberta, but today they take more than double that amount. On diesel, refiners now take more than what the oil itself costs. Taxes have decreased over the year, and so has the gas stations' markup.

Suzanne Gray, a senior research analyst at Kalibrate Canada, attributes the widening crack spread to unusually low refined product inventories. She also suggests that high pump prices may be leading some Canadians to choose to drive less, which could further reduce demand for gasoline.