There are plenty of theories about what is driving the price of crude higher, but one thing is clear: it isn't gasoline. Without even getting into the issue of crude's ties to the falling dollar and the threat of stagflation, the clearest fundamental driver in the price increase has been the across-the-board climb in all parts of the distillate cut of the barrel: heating oil, jet fuel, diesel and kerosene.

We looked at some data, away from the NYMEX and into the physical market. We compared the Platts assessment of Light Louisiana Sweet crude on the Gulf Coast with two benchmark Platts assessments: ultra-low sulfur diesel and conventional 87 octane gasoline. We looked at data going back to October.

On October 1, taking the price of ULSD per gallon and multiplying it by 42, the number of gallons in a barrel, gave you a differential of $13.40/b over a barrel of LLS. That number already was high by historical standards. If you did the same math based on yesterday's Platts spot assessments, that spread would be $25.93, a sharp rise.

The math on gasoline shows a spread of $3.09/barrel on October 1, and a mere 48 cts yesterday. A barrel of LLS crude yesterday was almost equal to a barrel of finished conventional gasoline, a startling development.

So it could be argued that, yes, gasoline will have to catch up to LLS, because a 48 cent crack spread is not going to hold. But regardless of how much it needs to move, you can see from the overall movement in these spreads that the idea that gasoline will eventually have to catch up 1-for-1 with crude is clearly not true. The fact is, in at least this small example, gasoline has mostly matched crude. Since October 1, LLS is up about 35%, and conventional gasoline is up 31%. ULSD during that time is up 43%.

But these weak crack spreads will impact refinery behavior. Refiners now are assuredly doing everything they can to squeeze as little gasoline out of their refining operations and push out as much distillate as possible. That should take some gasoline off the market, and tighten the supply/demand fundamentals.

To hear the quick-hit analysts talking about retail gasoline "needing" to rise further to match crude's rise, well, it just doesn't happen that way. To the contrary, the world's demand for diesel and other distillates seems fairly healthy, while gasoline is taking the brunt of declining economic activity in the US.

Economic theory holds that, over time, markets will return to the norm. But there have been structural changes in the oil world that have probably affected what that norm is. We have tighter sulfur specifications on diesel, which have the effect of reducing supply. Government-friendly policies toward diesel have increased its use in passenger vehicles at the expense of gasoline. The surge in the supply of ethanol, which displaces gasoline, have probably weakened that market at the margin. Air travel seems to be getting hit less by economic weakness in the US than gasoline consumption, boosting jet, and a weak dollar is making the US a great place for Europeans and others to travel to on vacation. To get there, they need to fly.

So if you're trying to predict how much your retail gasoline bill is going to rise, figuring out the rise in crude prices will help, but it's far from a perfect answer.