The downstream sector is where crude finally becomes something useful. It takes the raw hydrocarbons delivered by midstream pipelines and transforms them into finished products, then markets and distributes those products to consumers, businesses and industry.
Downstream covers refining, marketing and distribution. A single barrel of crude is split into many products — gasoline, diesel, jet fuel, kerosene, heating oil, lubricants and asphalt — each with its own market and price.
Refining
The heart of downstream is the refinery. A refinery first separates crude by boiling point, then chemically converts the heavier fractions into more valuable light products, and finally treats those products to remove contaminants. The result is a slate of fuels and feedstocks tailored to market demand.
| Product | Typical use |
|---|---|
| Gasoline | Passenger vehicles |
| Diesel | Trucks, trains, heavy equipment |
| Jet fuel / kerosene | Aviation, heating |
| Heating oil | Residential and industrial heating |
| Lubricants | Engine and machinery oils |
| Asphalt | Road paving, roofing |
Marketing and distribution
Once products leave the refinery, the downstream sector moves them to where they are consumed. Distribution uses product pipelines, trucks and terminals to deliver fuel to storage racks and retail outlets. Marketing covers the branded sale of those products — the network of retail gas stations, commercial fuel supply and lubricant brands that reach the end customer.
The difference between the price of crude oil and the value of the refined products made from it — a key measure of a refiner's profit margin.
Petrochemicals
Many downstream complexes also feed petrochemical plants that turn refinery streams and NGLs into the building blocks of plastics, fertilizers, synthetic fibers and countless other materials. This extends the value chain well beyond fuels and into nearly every manufactured product.
Downstream profitability is driven by refining margins — the spread between what a refiner pays for crude and what it earns for finished products — rather than the crude price alone. A refiner can do well even when oil prices fall, as long as product prices hold up.
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Frequently asked
A refinery produces gasoline, diesel, jet fuel, kerosene, heating oil, lubricants and asphalt, plus feedstocks for petrochemical plants — all from a single barrel of crude.
Refining converts crude into finished products at a refinery. Marketing is the branded sale and distribution of those products to consumers through gas stations and commercial channels.
Refiners earn the crack spread — the difference between the cost of crude and the combined value of the refined products they sell. A wider spread means higher margins.