Cracking

AAA

DEFINITION of 'Cracking'

Used in the oil and gas industry to refer to a variety of methods whereby a larger product is broken down into smaller by-products. For example, crude oil can be processed (cracked) to produce "lighter" byproducts such as liquefied petroleum gas (LPG) or gasoline. When looking at investments in the oil industry, many investors will look at the crack spread, or the profit from "cracking" crude oil.

INVESTOPEDIA EXPLAINS 'Cracking'

Cracking splits larger molecules into smaller ones, or breaks the bonds of a larger, more complex material into smaller matter. Cracking can be accomplished in a variety of methods, including hydrocracking, fluid catalytic cracking and steam cracking.

RELATED TERMS
  1. Spud

    In the oil and gas industry, the process of beginning to drill ...
  2. Oil Field

    A tract of land used for extracting petroleum, or crude oil, ...
  3. Oil Refinery

    An industrial plant that refines crude oil into petroleum products ...
  4. Crude Oil

    A naturally occurring, unrefined petroleum product composed of ...
  5. Oil Reserves

    An estimate of the amount of crude oil located in a particular ...
  6. Oil Sands

    Sand and rock material which contains crude bitumen (a heavy, ...
Related Articles
  1. Active Trading

    Oil And Gas Industry Primer

    Before jumping into this hot sector, learn how these companies make their money.
  2. Active Trading

    What Determines Oil Prices?

    Changes in the price of oil aren't arbitrary. Read on to find out what moves them and why.
  3. Options & Futures

    Peak Oil: Problems And Possibilities

    Learn a little more about the "non" part of this nonrenewable resource.
  4. Budgeting

    Understanding Oil Industry Terminology

    The drillers are just one aspect of the oil & gas industry, and by knowing some details of their role, you'll be better suited to make investment decisions.
  5. Active Trading

    Unearth Profits In Oil Exploration And Production

    Drill down into financial statements to tap into the right companies and let returns flow.
  6. Markets

    Saudi Arabia: King Abdullah's Death and Oil's Fall

    The recent passing of King Abdullah of Saudi Arabia has brought the kingdom's future—and its stance on oil production—into question.
  7. Economics

    Oil Prices' Impact On Oil Transport Sector

    Short-term changes in oil prices and in the volume of oil produced have a marginal impact on the oil transportation industry in Canada.
  8. Economics

    How does fracking affect oil prices?

    Read about the short- and long-term impacts of hydraulic fracturing, also known as fracking, on global oil markets and oil prices.
  9. Options & Futures

    How does fracking affect natural gas prices?

    Take a deeper look at the impact of hydraulic fracturing on the price for natural gas, and why fracking may eventually price itself out.
  10. Economics

    What country is the world's largest coal producer?

    Producing nearly 50% of the world's supply, China is the world's largest global coal producer and a large force in global coal pricing and trade.

You May Also Like

Hot Definitions
  1. Command Economy

    A system where the government, rather than the free market, determines what goods should be produced, how much should be ...
  2. Prospectus

    A formal legal document, which is required by and filed with the Securities and Exchange Commission, that provides details ...
  3. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  4. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  5. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  6. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
Trading Center