Oil prices may fall, but gasoline prices won’t. Look at the trap we’re in.

But while everyone has been watching crude oil, a different oil measure — the one that arguably matters more for the price at the gas pump — has never stopped climbing. That measure, called the “crack spread,” is at all-time highs.

The crack spread is the gap between what a refinery pays for crude and what it earns selling the gasoline and diesel it makes from it. For most of the past decade that gap fluctuated between $10 and $15 a barrel. This week it hit $70, the widest spread ever recorded.

The margin for refining a barrel of oil is now more than what an entire barrel of crude cost the day this war began. And here is the tell: It kept climbing while crude collapsed, and it is still climbing now that crude is rising. It does not care which way the headline price moves.

The crack spread is the market telling you, in dollars, that the right crude is not reaching the right refineries. The price of oil can do whatever it likes. The machines that turn it into fuel are screaming either way.

Crude oil is not one thing

“Crude oil” is a collective term for any big batch of hydrocarbons pulled from the ground as a liquid. Every deposit is a different batch, and every batch makes a different mix of products when it runs through a refinery.

There’s no single crude. There are endless kinds, each one different depending on where it was drilled, the same way different fruits have different flavors and nutrients. Picture crude oil as fruit salad. Some batches are heavy on berries, some heavy on melon, but no two are the same.

Now say you run a juice factory that relies on apples, because apple juice is your most profitable product by far. One day the blends you can still get have fewer apples. You can still make juice, but not the apple juice that pays the bills, and every batch you run on the wrong blend earns less than it should.

That’s exactly the situation America is in today — with oil, not apples. The largest U.S. refineries were built long ago to best run heavy and sour crude: the thick, higher-sulfur oil from Canada, Venezuela, Mexico and the Persian Gulf. Then the U.S. shale boom brought in the opposite kind — light sweet crude that expensive refinery equipment doesn’t optimally use. That’s why America’s oil business is so confusing: The U.S. sells the oil it produces and buys someone else’s. It’s not crazy. America sells the “fruit” it has and buys what its “juice factories” were built for.

Why reopening the strait won’t fix the problem

Since the Iran war started, ceasefires have come and gone, but one constant has held: America keeps draining its own oil — fast.

Before the war, the global oil market was connected by a giant web of tankers that matched each kind of crude to the refinery best suited to handle it. Then the Strait of Hormuz closed and choked off the world’s most important artery. The matching collapsed. Countries didn’t politely wait for their usual grade. They grabbed whatever oil they could get.

Here’s what the markets are getting wrong. Reopening the strait doesn’t undo that. Turning the valve back on gets oil moving, but it takes time to optimize the tanker/refiner matching. And every time the shooting starts again, the clock resets.

This conundrum is coming to life in two numbers. The first is that, since this war started, ceasefires have come and gone, but one constant has held: America keeps draining its own oil — fast. Total crude in storage, including the Strategic Petroleum Reserve, has fallen to about 726 million barrels, the lowest level since 1984 and roughly 129 million barrels below where it stood when the war began.

The emergency reserve has taken the brunt of it: It now sits at a 43-year low. Storage tanks need a minimum amount of oil just to keep their pumps working; the industry calls it “tank bottoms.” Last week, the government’s own energy statisticians published an explainer on the term, because, at one of America’s most important oil hubs, prices now suggest the tanks may already be scraping bottom.

The long-term problem is worse

The U.S. government is handing energy strategy to people who care more about the next earnings report than about America’s security.

The deeper issue isn’t the Middle East war. It’s that the U.S. government is handing energy strategy to people who care more about the next quarterly earnings report than about America’s security.

After the 1973 oil crisis, when embargoes led to gas rationing, the country banned crude-oil exports. For 40 years the U.S. kept its oil at home for its national security. Then, in 2015, the ban was lifted. Today the U.S. exports more oil than ever, about 3 million barrels a day more than just a year ago, at the exact moment it’s draining U.S. reserves to the lowest levels in a generation.

Why does America sell oil when it so clearly needs it? There are only two honest answers. Either it’s the wrong kind, the light sweet crude U.S. refineries can’t use, which is a fair reason to sell it. Or the call is being made by people chasing short-term profit over national security. The truth is probably a bit of both, and nobody in charge is drawing a line between them. Drawing that line is the No. 1 job of a national energy strategy, and the U.S. doesn’t have one anymore.

The same thing is happening with natural gas the single biggest fuel for the power plants that make electricity. Demand for it is surging, driven by the enormous appetite of AI data centers, which consumed about half of all new U.S. electricity demand last year. And yet the U.S. is shipping record amounts of natural gas overseas. That trade has paid off nicely for shareholders of the exporters. Yet the price you pay for electricity at home is up almost 40%. America is selling the fuel that powers its electrical grid — and Americans are paying more because of it.

The Iran war will end one day. Maybe not this month, maybe not this year, and maybe not the way anyone expects. The Strait of Hormuz will open, and close, and open again. Eventually tankers will find their optimal refinery homes, and the immediate shock will pass.

But what comes after a shock is often worse than the shock itself. Remember the COVID-19 pandemic. The lockdowns and empty streets were over within months, but the fallout — snarled supply chains, empty shelves and the worst inflation in 40 years — hurt far more people. The shock was fast. The fallout was slow.

That is what Americans face again. The war is the shock. What follows — the drained reserves, the mismatched oil, the strained grid and the price we all pay — is the fallout. And the U.S. is meeting this challenge with the thinnest oil-reserve cushion in a generation.

Here is the bottom line. The American people need a long-term energy strategy that works for them. The U.S. doesn’t have to copy anyone else’s; the right plan will lean into the country’s unique advantages. But America needs a plan, one built for the people who live here, not for the investors who profit off of it. This is a matter of national security, and the time to put a hand back on the wheel is now, while we still can.

Eric Pachman is founder of Data 4 the People (D4TP) and a former chemical engineer. Michael Scott Kinch is a professor at Stony Brook University.

Read on: Oil prices could surpass $120 per barrel if disruptions in Strait of Hormuz don’t ease, says Goldman Sachs