In this week’s The Glass Half Full, Carson Group’s Ryan Detrick, Chief Market Strategist, and Sonu Varghese, Chief Macro Strategist, tackle the question everyone’s asking with oil near $100+ a barrel and turmoil in the Middle East: why aren’t we paying $10 at the pump? Sonu breaks down the makeup of pump prices—only about half is driven by crude oil itself, with 20–30% coming from crack spreads (refining margins), which are elevated right now due to a global shortage of refined product tied to Middle East supply disruptions and Ukrainian strikes on Russian refineries.
They dig into why Brent crude spiked to $120 a barrel from $60–70 when the crisis began but never reached the $200 many analysts predicted. Sonu points to two key releases valves: developed nations, especially the U.S., draining over 175 million barrels from strategic reserves (now at a 1982-level low of 287 million barrels) and a collapse in Chinese oil demand that freed up supply for other buyers. With China’s imports now climbing back toward pre-war levels and U.S. reserves far more depleted than in March, both flag the risk of prices creeping higher from here.
They close on diesel, which hit an all-time high of $6.20 a gallon and matters more than gasoline for the broader economy since it powers the trucks and supply chains that move food and goods nationwide, plus a note on weakening consumer confidence as pump prices bite. Their bottom line: no $10 gas yet, but keep an eye on the Middle East and Chinese demand for what comes next.
Key Takeaways
- Only about 50% of what drivers pay at the pump is driven by crude oil prices; another 20–30% comes from crack spreads (refining margins), which are elevated due to a global shortage of refined product.
- U.S. gasoline is averaging $4.31 a gallon (a record for this time of year) while diesel has hit an all-time high of $6.20 a gallon, driven by Middle East supply disruptions and Ukrainian strikes on Russian refineries.
- Brent crude spiked to $120 a barrel from $60–70 when the crisis began but never reached the $200 many analysts predicted, thanks to over 175 million barrels released from developed-nation strategic reserves and a temporary collapse in Chinese demand.
- The U.S. Strategic Petroleum Reserve has fallen to 287 million barrels, the lowest since 1982–83, and Chinese oil imports are climbing back toward pre-war levels—both signals that pump prices could creep higher if the Middle East crisis persists.
Jump to:
0:00 – Welcome and the $10 Question
1:16 – What Really Makes Up Pump Prices
3:02 – Strategic Reserves Kept Oil in Check
5:05 – China Demand Drops Then Returns
6:23 – Diesel Shock and Consumer Confidence
7:54 – What to Watch Next and Wrap
Connect with Ryan:
- LinkedIn: Ryan Detrick
- X: @ryandetrick
Connect with Sonu:
- LinkedIn: Sonu Varghese
- X: @sonusvarghese
The views stated in this podcast are not necessarily the opinion of Cetera Wealth Services, LLC, or CWM, LLC. and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.
Ryan Detrick and Sonu Varghese are non-registered associates of Cetera Wealth Services LLC.
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Please note: Cetera Wealth Services, LLC is not registered to offer direct investments into commodities or futures. Instead, we provide access to this asset class via mutual funds, exchange-traded funds (ETFs) and the stocks of associated companies. Investments in commodities may be affected by the overall market movements, changes in interest rates and other factors such as weather, disease, embargoes and international economic and political developments. Commodities are volatile investments and should form only a small part of a diversified portfolio. An investment in commodities may not be suitable for all investors.
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