Extremely interesting installment of This Week in Petroleum:
http://www.eia.gov/petroleum/weekly/archive/2015/150805/includes/analysis_print.cfm
For roughly the last 7 or 8 years, distillate crack spreads have been higher than gasoline crack spreads. This means that refineries made most of their profits from diesel, heating oil, and jet fuel. But to produce more diesel, they also produced gasoline, which was already abundant. Refiners cranked out diesel to meet demand, and dumped the unwanted gasoline on the market at whatever price they could get. This led to wide spreads between diesel and gasoline at the pump.
But TWIP reports that this has reversed -- the crack spread for gasoline is unusually high, while the crack spread for distillates has held steady or even declined. This, combined with low crude prices, is driving the refiners to put the pedal to the metal -- the last three weeks have been the 2nd, 3rd, and 4th biggest weeks in history for crude processing in the US.
What does this mean? It means cheaper diesel compared to gasoline -- not just for a few months in the late spring and early summer. Oh sure, gasoline will still be relatively cheap in the fall and early winter; the seasonal patterns will still hold. But on an annual basis, gasoline prices are rising compared to diesel and other distillate fuels.
