CNN shared some intriguing information yesterday. It reported that crude oil, trading at $82.38 (and moving lower today) was fast approaching the lowest level it's seen in a 52-week trading range. (The low in that range is $80.90 per barrel while the high end of that range is $144 per barrel.)

At the same time, gasoline futures contracts for September are trading at $2.78 (wholesale) which puts unleaded gasoline mid-range over the same period. The 52-week low for gasoline futures is $2.09 and the high is $3.40. Trading Economics reports that gasoline futures have rallied 44.37 percent during the last 12 months.

This link will show you the trend: CNN Money

Why the disparity? What's propping up gasoline futures? Do the people trading gasoline futures know something we don't? You can bet on it. But, maybe it has something to do with refiners, speculators and the crack spread. What's a "crack spread"? That's the term the financial markets and the oil industry uses to identify the price differential between the cost of crude oil and the cost of all the petroleum-based products, including gasoline, that refiners produce from it.

Oil refineries trade the crack spread as a hedge against price fluctuations and therefore reduce their risk and exposure to volatility in crude oil prices. To put it simply, In a commonly used crack spread, X = a number of barrels of crude oil; Y = barrels of gasoline and Z = distillate fuel and other refinery products; (X = Y+Z); a crack spread could be 3:2:1, 2:1:1, or 5:3:2.

According to the government's Energy Information Administration, refinery profits are tied directly to the crack spreads. Because refiners can reliably predict and control their own costs, the price of crude oil is the only wild card in this equation. But refiners are able to manage that pretty well. They 'lock in' future crude oil prices with crack spreads that ensure their profit margins regardless of the price of crude.

Don't get too upset... it's all legal. And after all, it's just a guess.