U.S. refineries are churning big profits compared to their international counterparts, in large part because the U.S. shale boom provides them with cheap crude oil and natural gas, the Energy Information Administration reports. That cheap feedstock gets converted into products such as gasoline that can be sold at international prices.
The EIA estimates that North American crude oil refineries earned profits of more than $7 per barrel higher than their European competitors in 2013. Compared to the rest of the world, North American refineries are earning about $4 more per barrel of crude oil. The difference is the so-called “crack spread,” or the difference between the purchase price of crude oil and the price of refined products.
A gush of domestic oil from places such as the Permian Basin in West Texas and the Bakken shale in North Dakota has given refineries an alternative to imported oil not seen in decades. The benchmark for domestic crude oil, called West Texas Intermediate, or WTI, traded considerably lower than Brent, the international standard, for much of 2013.
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