Refining Capacity, Utilisation and the Crack Spreads

United States refining capacity, measured twice, five months apart

This is the Two-Clock rule in its purest form: one quantity, two primary sources, two dates, and a difference with a named mechanism.

These are the same quantity measured five months apart and they differ by about 133,000 barrels per calendar day. EIA supplies the mechanism itself: Valero's Benicia refinery, 145,000 barrels per day, was still counted in the January 1, 2026 annual survey, and its capacity was removed from the monthly capacity estimates as of March 2026. The annual figure is not wrong — it is correct as of its own cover date, and a refinery that shut in the first quarter was operating on January 1. A reader who quotes the annual number in September is quoting a plant that no longer runs.

The gap is 133.5 thousand barrels per calendar day, which is 0.74% of the annual figure. That sounds like a rounding difference and it is not: it is one refinery. The mechanism EIA supplies is Valero's Benicia plant, whose capacity was still counted in the January 1 annual survey and had been removed from the monthly estimates by March 2026.

The operating instruction that follows is narrow and worth stating. Use the weekly figure for anything about the present — utilisation, spare processing capacity, whether the system can absorb a demand increase. Use the annual figure only for the things it uniquely carries, which are the plant-by-plant and state-by-state detail no weekly report contains. Do not mix a numerator from one and a denominator from the other, which is the error that produces utilisation rates above 100 per cent.

The count of operable refineries carries the same warning. There were 131 as of early 2026, down from 132 at the start of both 2024 and 2025. A count is a cruder instrument than a capacity figure — refineries differ by more than an order of magnitude in size — but the direction has been one way for a decade and the direction is the point.

The global picture, and the one figure on this reference without a date

Global refining capacity is the one figure on this reference that does not carry a measurement date. It is an industry compilation, not a figure the Institute has traced to a dated primary publication, and global refinery utilisation is computed against it. The numerator — July 2026 throughput — is dated and primary. The denominator is not. Every utilisation figure quoted on this reference therefore carries a dated top and an undated bottom, and that is why it is quoted to the nearest whole percentage point and never to a decimal.

Global refinery throughput of 80.9 million barrels a day in July 2026 against capacity of about 103.3 million gives a utilisation rate of roughly 78%. It is quoted to the whole per cent and never to a decimal, for the reason in the note above: the numerator is dated and primary, and the denominator is an industry compilation with no measurement date. A decimal place on that quotient would be a claim the underlying figures cannot support.

Read the throughput figure against its own history rather than against the capacity. July 2026 throughput was up 1.8 million barrels a day on the month and still nearly 5 million below July 2025. That is the shape of this episode: refineries running hard into extraordinary margins, and the system as a whole still processing far less crude than a year earlier because the crude is not there to process. The barrels missing from the top of the system are on the production ledger, and the passages they would have moved through are on the chokepoints ledger.

The crack spreads, computed from five price legs taken in one week

All five legs are the week ended August 28, 2026. That single condition is the only reason the arithmetic below means anything.

Crude leg: WTI at Cushing at $84.57 a barrel, which is $2.01357 a gallon over 42 gallons. Product legs and crude leg source: EIA spot price series: WTI at Cushing; New York Harbor conventional gasoline regular; New York Harbor Ultra-Low Sulfur No. 2 Diesel; New York Harbor No. 2 heating oil. Every crack figure in the last two columns is the Institute's computation from those legs and from nothing else.

A New York Harbor product crack is properly struck against a seaborne crude — Brent, or a Gulf Coast grade — not against WTI at Cushing, which is landlocked a thousand miles inland. The Institute does not hold a Brent quote for this exact week and so computes against WTI and says so. Because WTI normally trades below Brent, a WTI-based crack normally overstates a coastal refiner's margin by roughly the Brent-WTI spread. In this episode that spread has behaved abnormally and has at times inverted, so the direction of the error is not stable and the figures below should be read as the shape of the margin rather than as a refiner's realised margin.

The single most consequential line in that table is the distillate crack at $98.17 a barrel against gasoline at $63.56. Distillate is out-earning gasoline by 82.4¢ a gallon, or $34.61 a barrel, in the same week from the same crude. A refiner facing that spread will push every unit of yield flexibility it has toward distillate, and the limit it runs into is physical rather than commercial. That constraint, and why the crude removed from this market was the crude best suited to making distillate, is the subject of the diesel and distillates ledger.

The 3-2-1 crack of $75.10 a barrel is the conventional composite: two barrels of gasoline and one of distillate out of every three barrels of crude, which approximates a simple American refinery's yield. It is a useful single number and it hides the thing that matters in this cycle, because averaging a strong distillate crack with a weaker gasoline crack conceals precisely the divergence a refiner is responding to. Read the composite for the level and the two components for the behaviour.

Note also what a crack is not. It is a gross margin between two market prices, not a profit. It carries none of the energy the plant burns to do the conversion, no maintenance, no capital charge, no hedging result. A refiner's realised margin is lower and is not published weekly by anyone.

The unit trap, and how the same crack is quoted two ways

EIA quotes crack spreads in cents per gallon and the trade press quotes them in dollars per barrel. Forty-two gallons separate the two conventions, so a 74-cent distillate advantage is about $31 a barrel, and a figure quoted in the wrong unit is wrong by a factor of forty-two. Every crack on this page is computed in both units from the same underlying legs.

These two are EIA's own published statements and they are period averages rather than dated measurements, which is why they sit in a separate table from the computed cracks above. A period average and a single-week computation are different instruments and they are not reconciled here.

What the official forecast says, and where it is already behind

Forecast made forecast completed September 3, 2026. Printed as a forecast throughout.

Source: EIA Short-Term Energy Outlook, released September 9, 2026 (forecast completed September 3, 2026). The 2025 column is an actual and the other two are projections; the columns are not the same kind of number and the header says so.

The forecast moved toward the observation, which is worth recording because the Institute said in August that it would have to. The August 11 release put retail diesel at $4.85 for calendar 2026 while the weekly series was already printing above $5.90; the September 9 release raised it to $5.07, a 4.4 per cent revision in one month, and raised the 2027 figure from $4.07 to $4.40. The distillate crack moved in opposite directions across the two years in the same revision — lifted from $0.84 to $0.94 a gallon for 2026, and cut from $0.67 to $0.63 for 2027 — which is the agency restating, in margin terms, that it expects this to be a 2026 problem. Diesel averaged $5.600 in May 2026 on the monthly series and printed $5.967 in the week ended September 7, 2026, so even the revised full-year average sits well below the current weekly reading — arithmetically possible, since January and February were low enough, but it still implies a fall through the fourth quarter that has not begun. The 2027 figure still implies the disruption resolves. These are forecasts, and the Institute prints them as forecasts. One row was dropped rather than carried stale. The August table quoted a WTI spot forecast of $80.88 for 2026 and $65.39 for 2027. The September release does not restate WTI in the published summary tables the Institute has read, and a figure from the superseded release would sit in this table looking like a September number. It has been removed instead of relabelled, and it will return when the Institute has read it on the current clock.

The retail diesel line is the one to watch. A full-year 2026 average of $5.07 against a weekly print of $5.967 in early September is arithmetically possible — January and February were low enough — but it requires a fall through the fourth quarter that has not started. And the 2027 figure of $4.40 is a statement that the disruption resolves. Set that against the industry's own survey expectations on the chokepoints ledger, where the modal firm expected normal flows by August 2026 and was wrong.

What this page cannot compute, stated rather than approximated

A current United States refinery utilisation rate. Utilisation is gross inputs to crude distillation units divided by operable capacity. The Institute holds the denominator for the week ended August 28, 2026 and does not hold the numerator for that same week from a primary source. A utilisation figure could be assembled by pairing the weekly capacity with a gross-inputs figure from a different week, and it would be wrong in exactly the way this reference exists to prevent. So the two capacity clocks are printed above and the quotient is not.

A dated global capacity figure. Covered in the note in the global section: the denominator is an industry compilation and every utilisation figure computed against it inherits an undated bottom. This is the weakest figure on the whole reference and it is labelled as such everywhere it appears.

A refiner's realised margin. Not published weekly by anyone, and the crack is not a substitute for it. Where the Institute reports all-time-high Atlantic Basin margins, that is the IEA's characterisation of the crack environment rather than an audited profit figure, and it is attributed as such in the global table above.

Where the margin sits, and what it is telling refiners

The rest of the reference