Summary Refineries have been the one bright spot for oil and gas investing lately. A new ETF captures the investment trend but still requires considerable monitoring by the investor. CRAK offers both U.S. and global refiners exposure, which offers diversification but also additional information needs. I couldn’t help myself, a chance to add levity in the face of oil market woes and gyrations. Then it appeared on my radar. CRAK . No, not the “Breaking Bad” sort, but the recently launched ETF. We know how horribly the oil and gas sector has fared, save the refiners. Well now you can own a “slice” of CRAK for your energy or retirement portfolio. I acknowledge the ETF trading issues revealed in the last couple of weeks as markets took a dive, hence the slice approach to this segment for the non-fainthearted. The fund Market Vectors Oil Refiners ETF ((Pending: CRAK )) launched 8/18/2015, right in lock step with the observed trend that refiners were performing better than other energy sub-sectors. (click to enlarge) Source: here . What are drivers? One driver behind the profitability in the sector is lower oil prices. Lower oil prices result in lower input prices, which can lead to higher margins. The fund says, “Unlike other energy sector segments, oil refiners may benefit from lower oil prices if crack spreads remain attractive.” Crack spreads are the differentials between oil prices and the refined products. In the U.S., product growth have been playing a role as well. Furthermore, the U.S. Energy Information Administration (NYSEMKT: EIA ) says: (As of July EIA estimates) that refinery runs will average 16.7 million b/d from April through September and then decline slightly in the fourth quarter to 16.2 million b/d before falling further to 15.8 million b/d in the first quarter of 2016. Following the winter period of lower demand and refinery maintenance, EIA’s expects U.S. refinery runs will reach new highs next summer, averaging 16.9 million b/d in third quarter of 2016. Low oil prices are expected to keep demand for gasoline slightly increasing in 2016. Recent EIA U.S. crude production estimates suggest slightly lower production but prices are expected to stay soft longer than previously expected given overall anticipated global supply. The EIA notes in a May report that increasing U.S. shale oil production is expected to lead to a decline in crude imports, an increase in refinery runs, new investments to expand refinery capacity, and higher crude and refined petroleum product exports. This is the expectation to the year 2025 under three general scenarios: 1) Low crude production under current export restrictions (10.9 million bbl/d in 2025) 2) High crude production without export restrictions (14.7 million bbl/d in 2025) 3) High crude production with current export restrictions (14.7 million bbl/d in 2025) The cases follow, in order from left to right: (click to enlarge) About CRAK The fund tracks the pure-play index (MVCRAKTR) comprised of companies that generate at least 50% of their revenue from crude oil refining, including oil, naphtha and other petrochemicals. It tracks the performance of the largest and most liquid companies in the global oil refining segment. The global firms included in the tracked index come from the following countries: Another way to view these country weightings is based on their expected growth rates, or GDP. This offers an indication as to whether these segments have growth prospects within a country context. Estimates for the U.S. are 2.4% for 2015; Japan 0.8%; India 7.5%; S. Korea 2.6%; Poland 3.4% and Taiwan 3.4%, to name a few (source: The Economist, Sept. 5, 2015, p 88). Thinking about this another way, the ETF offers exposure to energy-related infrastructure in economies with reasonable growth, for now. But it’s a little more complicated than that. Specific companies included in the index: (click to enlarge) Source detail: here . Considering the five U.S. refiners – Phillips (NYSE: PSX ), Marathon Petroleum (NYSE: MPC ), Valero Energy (NYSE: VLO ), Tesoro (NYSE: TSO ) and Holly Corp (NYSE: HFC ) – let’s look at their performance at a time of rising oil prices from 2013 to the peak of July 2014, and then down. (click to enlarge) Bloomberg offers a view of Reliance Industries vs. Phillips and Valero. (click to enlarge) This table shows the performance of the tracked index in comparison with FRAK , just for grins, as of 9/09/2015. (click to enlarge) (click to enlarge) Source: here. Findings I understand the immediate appeal of a swathe of exposure to the better performing segment of the oil and gas industry. The first performance chart is no longer the whole story however, given a nearly 6% decline in the last month for CRAK’s tracker index, MYCRAKTR. Some recovery is evident from the index performance above. While I have illustrated a broad brush stroke of the dynamics related to an ETF approach and refiners, serious complexity is involved in these dynamics. For example , from the EIA: Higher demand for gasoline is supporting these margins (from years of higher distillate crack spreads followed now by gasoline). U.S. gasoline product supplied is up 2.9% through the first five months of 2015; demand is also higher in major world markets such as Europe and India so far this year compared with 2014. Total U.S. petroleum product supplied (a proxy for demand) is up 2.5% through the first five months of the year compared with 2014… (Net) exports are 19% higher this year through May. Thus, investors interested in this ETF approach need to be monitoring variables such as oil prices, crack spreads, product exports and both domestic and global economic demand forecasts, at minimum. Some suggest that refinery investment exposure belongs to the traders owing to cyclicality, and one can see why this is so. Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More…) I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.