Steve-
Yes, your assumption is correct.
At the first stage of processing in a "crude unit" there will only be x amount of gallons of gasoline and x amount gallons of diesel that can be obtained per barrel of crude from the straight run crude processor. There is not much cheating for one product or the other at this level.
The second level of processing is done in a catalytic cracking unit, more commonly known as cat crackers. The feed stock for these units is the gas oil and resid. The operators can control which product they desire for maximum production by temperature adjustments.
Hence, when you have heard that the refineries gear up for gasoline production to offset summer demand, they start running higher temperatures on the cat crackers in early spring, usually about Feb.
Sometime about this time of year the temperatures are lowered to increase the production of the diesel/fuel oil to start building inventory for the winter heating oil demand.
There is another factor involved that the public is not aware of and this is the routine repairs that is done to these units. Usually they are taken off line in the winter months when the demand for gasoline is lower in order to prepare for full operating conditions in the spring for the gasoline runs. Turnaround repair time can be anywhere from 3-5 weeks. A major company will stagger their shut downs between refineries in order to avert a shortage.
I feel the diesel prices will continue to be elevated due to demand as about 85% of the supply is consumed by the commerical and constuction industry and they don't mind passing the cost on to the consumer.
Charlie
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