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.


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.

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  1. How much oil must be produced to maintain inventory levels in the United States?

    Domestic energy investors should track the reserve inventory of crude oil for the United States, which is released in a weekly ... Read Full Answer >>
  2. To what extent is the oil and gas sector dominated by a few major companies?

    Oil and gas are two expansive and highly diverse product lines, with active competition domestically and internationally. ... Read Full Answer >>
  3. How do the costs of oil sands producers compare to traditional drillers?

    The oil sands of Canada are some of the most expensive crude oil assets in the world to produce. Each asset type, such as ... Read Full Answer >>
  4. Do all oil companies received the quoted price of West Texas Intermediate for their ...

    The quoted, or spot, price of West Texas Intermediate, or WTI, crude oil is just one of several benchmark oil prices. The ... Read Full Answer >>
  5. How long does it take an oil and gas producer to go from drilling to production?

    Depending on the depth of drilling required and the type of drilling method used, a standard oil well can commonly advance ... Read Full Answer >>
  6. How do the average costs compare for the different types of oil drilling rigs?

    Average costs vary widely between different types of oil rigs, starting at around $20 million and ranging as high as close ... Read Full Answer >>

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