Tom Ellsworth of the PBD Podcast walks through the numbers in Numbers Scream Ep. 35: The Real Reason Your Gas Is So Expensive.
Watch it here: [VIDEO]
The default story is the Iran conflict. Crude did jump when the war started—from the low $60s toward $90. Ellsworth’s point is that this is not why the pump stays near $4.
What the driver pays is set in the middle, between the well and the station. That number is the crack spread.
The 3-2-1 crack is three barrels of oil turned into two barrels of gasoline and one barrel of diesel. Historically that spread sat at $10–$20 a barrel. In this episode it is $64. It hit a record $70 in mid-July.
WTI around $80 plus a $64 crack already puts the product cost near $144 before distribution, taxes, and the station cut. A normal crack produced a national average of about $2.38–$2.50. The current spread produces about $4. California is in the mid-$5s. Indiana is lower because of taxes and rules, not cheaper molecules.
The spread widened because refining capacity disappeared. Since 2019 the United States has lost about 1.2 million barrels a day. Seven plants went offline; three were in California. The rest are running near full tilt. Phillips 66’s refining margin roughly doubled. No new U.S. refineries are being built. The floor moved.
California is the clearest case. Emissions rules, billion-dollar retrofits, and taxes on the activity made plants uneconomic. High pump prices are treated as a lever: expensive gasoline pushes more people toward EVs.
Diesel matters more than most drivers notice. When distillate is tight, trucks and trains raise the cost of everything else.
Crude can fall and the pump can stay high if there is not enough refining to turn oil into fuel. The war moved the barrel. The crack spread is why the receipt did not follow it back down.
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