It's all about the
crack spread. Up until recently, refiners were making most of their money off of diesel because gasoline demand was harder to predict with high prices and consumption all over the place. Diesel otoh, since it's used primarily by industry, and wasn't as erratic, was where they made their margins. Now that we're in a recession, it's diesel demand that's dropping and gasoline is relatively strong, so that's where they're looking to make money.
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Here's what is happening: The margin or spread for the refiner, which is the difference between crude oil costs and wholesale diesel prices, was 65-cents per gallon earlier this month. Now it's down to 35 cents.
Meanwhile, refiners were actually losing money on gasoline sales early in January. But they're working to change that and briefly boosted the margin to 35-cents per gallon.
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