One way to represent the economics of a refinery is to calculate its Refinery Gross Margin. GRM is the difference between crude oil price and total value of petroleum products produced by the refinery. the difference in dollars per barrel between its product revenue (sum of barrels of each product multiplied by the price of each product) and the cost of raw materials (primarily crude, but also purchased additives like butane and ethanol). For example, if a refinery receives $80 from the sale of the products refined from a barrel of crude oil that costs $70/bbl, then the Refinery Gross Margin is $10/bbl. The Net or Cash Margin is equal to the gross margin minus the operating costs (excluding income taxes, depreciation and financial charges). Continuing the example, if a refinery experiences operating costs of $2 per barrel, then the Net Margin is $8/bbl.

1. What is Gross refining margin
GRM?
One way to represent the economics of a refinery is to calculate its
Refinery Gross Margin. GRM is the difference between crude oil price
and total value of petroleum products produced by the refinery.
the difference in dollars per barrel between its product revenue (sum of
barrels of each product multiplied by the price of each product) and the
cost of raw materials (primarily crude, but also purchased additives like
butane and ethanol). For example, if a refinery receives $80 from the sale
of the products refined from a barrel of crude oil that costs $70/bbl, then
the Refinery Gross Margin is $10/bbl. The Net or Cash Margin is equal to
the gross margin minus the operating costs (excluding income taxes,
depreciation and financial charges). Continuing the example, if a refinery
experiences operating costs of $2 per barrel, then the Net Margin is
$8/bbl.
The second point which determines the GRM of a refinery is its Nelson
Complexity. Higher Nelson Complexity of a refinery enables it to process
sour crude which gives a better GRM, due to price differential of crude
between sweet crude and sour crude. Sweet and sour depend on sulphur
content of crude oil and sweet has less than 0.5 per cent sulphur while
sour crude has more than 0.5 per cent.
Higher the GRM's higher the Profit Yields.
The factors that have contributed to high GRMs are
• Cost of sourcing crude oil
• Manufacturing reliability and efficiency
• Ability to produce quality transportation fuels
• Flexibility of crude oil receipt and product evacuation infrastructure
• Demand - Supply mismatch of the products
• The duty structure for crude & petroleum products Crude Mix (API &
Sulfur) processed in the refinery depends on Refinery Complexity i.e.
Nelson Complexity Fuel & Losses incurred in the production process. The
standalone domestic oil refineries are paid import parity price, which is
the international price of the product plus insurance, freight and custom
duty. So, higher custom duty on product would result in higher GRM.