Refining Disruptions Drive Elevated Crack Spreads, Pushing U.S. Gasoline Prices Higher
Global supply constraints from refining outages in Russia, China, and the Middle East have widened the profit margin for converting crude oil into fuel, raising pump prices especially on U.S. coasts.
What happened
Gasoline crack spreads—the profitability differential between crude oil and refined product prices—have averaged approximately $1 per gallon above 2025 levels since May, with the 2025 peak at 60 cents/gal. Disruptions to refining in Russia, China, and the Middle East have tightened global gasoline supplies, forcing U.S. refiners to import more product and export more domestically. Since March, total U.S. gasoline imports (including blending components) have fallen 32% below the five-year average, with Jones Act waivers partially offsetting reduced flows. Distillate fuel oil crack spreads are even more elevated, averaging 74 cents/gal above gasoline spreads in New York Harbor since March, with U.S. distillate inventories 14% below the five-year average compared to gasoline at 6% below. Regional gasoline prices as of Labor Day averaged $5.21/gal on the West Coast, $4.27/gal in the Rocky Mountains, $4.07/gal nationally, and as low as $3.62/gal on the Gulf Coast.
Context
Crack spreads directly reflect refining profitability and wholesale product scarcity. The elevated spreads indicate that global refining disruptions have created a supply vacuum, particularly for distillate fuels (diesel and jet fuel) where the disrupted regions supply proportionally larger volumes. U.S. refiners have responded by maximizing distillate production at the expense of gasoline yields, depleting both product inventories below historical norms. Coastal regions dependent on imports—the East and West Coasts—face higher prices due to reduced foreign supplies, while the Gulf Coast benefits from proximity to domestic production and lower import dependency. The combination of crude oil price increases and elevated crack spreads is transmitting to retail pump prices, with regional variation reflecting local supply disruptions and sourcing patterns.