Falling crude has not produced equivalent drops in consumer fuel costs because
refined-product supplies—not crude—are tight. The 3-2-1 crack spread has jumped
to a record $65/bbl, implying refiners can buy crude at roughly $71/bbl and sell
finished products valued around $136. The gap reflects refinery feed
shortages—firms running cautious inventories and disruptions around the Strait
of Hormuz, where refiners account for over 10% of global product output—rather
than raw crude scarcity. Market models that tie consumer fuel costs directly to
crude risk understating near-term energy inflation. Diesel remains elevated,
keeping transport costs high and sustaining upward pressure on other consumers
prices; the price gap has also attracted political attention, with Trump
threatening action against oil companies.
