Refineries are closing due to environmental pressure. However, the public does not want EVs and the demand for diesel and jet fuel is on the rise. 
Refining Bottleneck
Bloomberg reports A Crunch in Key Corner of Oil Market Leaves Consumers Vulnerable to Heat and War.
Oil demand growth has outpaced the increase in refinery capacity since 2021, and this will continue through 2027, according to industry consultant FGE. After 2028, there are no confirmed new refinery projects, it said, though there will likely be projects undertaken in Asia and the Middle East.
“The refining system is structurally tight,” said Nikhil Bhandari, Goldman Sachs Group Inc’s co-head of APAC natural resources and clean energy research. “That’s because of the backdrop where we’ve had 4% to 5% of global refining capacity closing in the last five years.” Global refinery processing rates this year are near record highs, according to the bank’s data going back to 2006.
Plants there are already running at about 88% utilization, leaving little room for more, according to Parsley Ong, head of Asian energy and chemicals at JPMorgan Chase & Co. “Refineries are already running at the highest utilization rates in recent history.”
Politicians Doing Their Job?
Here’s the hoot of the day: “Politicians are doing their job to meet people’s demands,” said Steve Sawyer, director of refining at FGE.
Sawyer is half right, adding “But peak demand for oil may take longer than what these politicians would like.”
US Diesel Futures
Politicians “Doing Their Job“
- Politicians are cramming EVs down everyone’s throats although the infrastructure is not in place. See What to Expect When Politicians Try to Pick Technology Winners Part 1
- And EVs are stacking up on dealer lots because few people want them. See Rental Car EV Pains, No One in their Right Mind Wants Them Now
- The UAW is on strike and demands protection from plant closures because EVs require less labor to make. See Elon Musk Taunts the UAW, “Tesla Pays Workers More and We Have Fun”
- The National Highway Traffic Safety Administration has concluded Biden’s mileage standards have “Net benefits for passenger cars remain negative across alternatives” vs doing nothing at all. See The Shocking Truth About Biden’s Proposed Energy Fuel Standards
- EVs don’t do a damn thing for the environment. See Biden’s Solar Push Is Destroying the Desert and Releasing Stored Carbon
- Less discuss subsidies. Please note that despite massive subsidies Biden’s Green Energy Inflation Reduction Act Needs a Big Bailout Already
Other than that, politicians are doing a damn fine job somewhere, if only I could find where. Oh wait, I remember.
You have to admit that looting in San Francisco is far more efficient than at any time in history. And no one gets physically hurt as long as they stand back or cooperate with the looters.
The interesting thing is trucking is in the gutter and we still have upward pressure on diesel.
Not to worry, a prolonged UAW strike might help that. So would a strong recession.
SEE PAGE 59 – THE PERFECTSTORM : The economy is a surplus energy equation, not a monetary one, and growth in output (and in the global population) since the Industrial Revolution has resulted from the harnessing of ever-greater quantities of energy. Butt he critical relationship between energy production and the energy cost of extraction is now deteriorating so rapidly that the economy as we have known it for more than two centuries is beginning to unravel
link to ftalphaville-cdn.ft.com
Shale binge has spoiled US reserves, top investor warns Financial Times.
Preface. Conventional crude oil production may have already peaked in 2008 at 69.5million barrels per day (mb/d) according to Europe’s International Energy Agency (IEA 2018 p45). The U.S. Energy Information Agency shows global peak crude oil production at a later date in 2018 at 82.9mb/d (EIA 2020) because they included tight oil, oil sands, and deep-sea oil. Though it will take several years of lower oil production to be sure the peak occurred. Regardless, world production has been on a plateau since 2005.
What’s saved the world from oil decline was unconventional tight “fracked” oil, which accounted for 63% of total U.S. crude oil production in 2019 and 83% of global oil growth from 2009 to 2019. So it’s a big deal if we’ve reached the peak of fracked oil, because that is also the peak of both conventional and unconventional oil and the decline of all oil in the future.
Some key points from this Financial Times article: link to energyskeptic.com
Our Oil Predicament Explained: Heavy Oil and the Diesel Fuel it Provides Are Key
It has recently become clear to me that heavy oil, which is needed to produce diesel and jet fuel, plays a far more significant role in the world economy than most people understand. We need heavy oil that can be extracted, processed, and transported inexpensively to be able to provide the category of fuels sometimes referred to as Middle Distillates if our modern economy is to continue. A transition to electricity doesn’t work for most heavy equipment that is powered by diesel or jet fuel.
A major concern is that the physics of our self-organizing economy plays an important role in determining what actually happens. Leaders may think that they are in charge, but their power to change the way the overall system works, in the chosen direction, is quite limited. The physics of the system tends to keep oil prices lower than heavy oil producers would prefer. It tends to cause debt bubbles to collapse. It tends to squeeze out “inefficient” uses of oil from the system in ways we wouldn’t expect. In the future, the physics of the system may keep parts of the world economy operating while other inefficient pieces get squeezed out.
In this post, I will try to explain some of the issues with oil limits as they seem to be playing out, particularly as they apply to diesel and jet fuel, the major components of Middle Distillates.
link to ourfiniteworld.com
Related to this topic, I saw a news article where the Canadians are building a trans mountain pipeline to the west coast with capacity of some half million barrels per day. Shipment will be to the far east and west coast refineries. This is oil we could have flowing to our refineries or at least through the US for re-export if the Keystone pipeline project had not been disastrously nixed by the Biden administration. This series of events will definitely contribute to our energy coast and be deleterious to our energy security.
“You’re gonna need a bigger pandemic.”
framing only as not enough distillation in the United States isn’t the whole story. We are also selling our diesel overseas at increased rates. This also is the argument for the instability of fossil fuels. Basically they are like a yo yo going up and down. When the 100% renewable energy system is in place, we will be in a much more stable energy supply system. Intentional over production of energy every day will guarantee enough energy. Storage and transmission will help even this out greatly. Battery semis can now replace most of diesel trucking.
We will have much better energy security leaving FF in the ground.
link to bloomberg.com
US Retail Diesel Prices Rise for First Time in Two Months, Hitting $4.98 a Gallon
Increase brings 62-day streak of price declines to an end
National stockpiles are at lowest seasonal level since 2000
US diesel prices at the pump rose overnight, snapping the longest losing streak in two years as farmers stocked up on the fuel used to harvest crops, competing with truckers for a shrinking pool of supplies.
The country’s average retail diesel price rose to $4.977 a gallon, climbing for the first time since peaking at $5.816 a gallon in mid-June, according to auto club AAA. The increase ends 62 consecutive days of declines. Prices at the pump have risen along with diesel futures contracts, which have gained more than 20% in a little over two weeks.
While high gasoline prices have been a major political challenge for President Joe Biden, diesel is the fuel that powers the US economy, and rising costs to transport goods often filter through to consumers in the form of higher prices.
Midwest farmers are already seeing more expensive diesel. Agricultural demand helped propel Tulsa, Oklahoma, to the country’s most expensive wholesale hub for the fuel, exceeding places such as New York and Los Angeles, according to data compiled by Bloomberg.
US consumers are also competing with overseas buyers for the world’s most in-demand fuel. US refiners have been exporting a massive amount of diesel to buyers in Latin America and Europe who are attempting to sidestep Russian fuel.
Diesel prices in the US face more upward pressure as upcoming refinery maintenance threatens to further deplete already-low stockpiles. The country’s distillates inventories, which include diesel, are at their lowest in more than two decades for this time of year, according to government data.
The only problem I have with ev’s is the lack of choice. When autos started replacing horses nobody said we had to go out and shoot all the horses to force everyone into model A’s or T’s or any of the other models out there. The market chose.
Instead of forcing down the supply side of energy the market should increase the demand side of RE by giving choices to the market, not cramming it down their throats.
Nor is anyone saying you have to get rid of your gas car.
Last time DIESEL COST JUMPED LIKE THIS WE WENT INTO IRAQ WAR WITHIN FEW WEEKS.
EVs don’t go in battlefields
Where do you get watts?
In other news, KTLA reported over the weekend, that Tesla had produced its 5 millionth car.
I think on track for 1.8 million this year or something, right?
Someone forgot to tell all the Tesla buyers that Mish doesn’t like EVs.
it was a click bait post. he has a following of backward old boomers.
California is suing 5 oil companies.
ABC7 reported “the lawsuit would force these companies to fund recovery efforts on the state’s major weather events. California has seen historic wildfires, extreme drought and record-high temperatures Bonta says was a factor of climate change.”
Who uses these fuels? The State of California. Where would California and the state government be, without these fuels?
Bonta is a propagandist.
Refiners refuse to upgrade or build new to meet enviro regulations because of “margins” yet are more than happy to use free cash to buy back as much stock as possible instead.
The Reagan era relaxation of the stock buyback rules has done more harm to American industry/competitiveness than any other thing, including congressional actions.
you are half right. stock buy backs are just what owners like to do in public and private industries. i don’t get the knuckleheads that think it is some evil cabal. brainwashed serfs.
CRAK, oil refiners ETF peaked in Oct 2018 @36.19. Today CRAK H is 35.19
CL 1W BB : Nov 5/12 2007, 98.72/90.13. Mon high is 91.32, but the week isn’t over.
EV advocates are overly optimistic about future state. More so than Popular Science mags.
Everything will be “figured out” in a matter of years from charging times, recycling batteries to those kids in the Congo eventually earning a living wage digging up cobalt which by the way won’t even be used in the FUTURE. MIT just figured out how to do something with something that looks promising….more to come…meh.
We’ll uh. Batteries are being recycled and new batteries use little to no cobalt and none of it is being mined by children. There are already fast chargers in existence. They just haven’t been rolled out extensively.
Everything you mentioned as being futuristic is already here.
this site is filled with doomers. and very arrogant and ignorant folks who think they are smart. that’s a great thing as they are our competition for hunting and gathering in life. i’m for sure positive our empire is collapsing, but a net good. we’ll still be around, just like spain and england……..
owners and serfs. only choice in life. that matters economically. god bless the serfs.
I’m sure they will figure it out. Popular Science mags said they would in the 70’s. That along with super efficient solar and wind power. I wish them the best and also those kids mining cobalt and other rare minerals in the Congo earning a living wage but not for anything dealing with EV’s since everyone knows that is a lie. They are not mining anything used in EV’s. Forbidden. Things are looking up.
Keep setting your money on fire if you want, then. Making personal finance decisions based on your political tribe seems nuts to me but c’est la vie.
The preeminence of the (ITV) Individual Transport Vehicle may be coming to an end whether it be EV or combustion.
… if only because the roads are so crowded they’re unusable.
People with no hobbies and no life substitute driving around for those things, and it’s wasteful and dumb.
Nah, bicycles will survive
I’m not going to buy a car prone to self-combust.
Getting an EV then?
link to thedriven.io
Too late.
EVs make sense when paired with nuclear. It is energy dense enough to provide the needed increase in power. And we need a massive amount.
The main PR blem is politicians pandering to slim interests without developing a comprehensive roadmap. With all the supposed brainpower in government, that’s a travesty.
Agreed. And we could take that further and say EVs make more sense as hydrogen fuel cells. All that’s needed is home system that uses a standard 20-amp wall outlet to convert water to hydrogen efficiently. Toyota’s Mirai fuel-cell car stores 5.0 kg of hydrogen at 10K psi.
I am truly baffled that battery was chosen over hydrogen. I guess people are afraid of that hydrogen tank.
Hydrogen is very explosive and difficult to contain. Electricity is a lot more flexible and has no transport cost. It’s already everywhere.
Electricity definitely has a transport cost. It’s constantly leaking as it moves over the lines.
They why there is the search for the holy grail of super conductors which have no loss.
It doesn’t get delivered by a semi.
Hydrogen is the smallest element. Hydrogen leaks. Watch a helium balloon over 24 hrs (which is the second smallest element) and by the next day its flat.
They don’t store it in hydrogen format for the reasons you stated and they especially don’t store it in gas form.
Increasingly they store it as a compound and then remove the hydrogen element just before use. The compound (ammonia) is reused making more fuel.
The materials to make fuel cells have been quite expensive in the past. I believe there’s been sufficient innovation in materials that the cost of the membrane that produces the electricity has started to drop significantly. What’s needed is a big breakthrough on the electrolysis front and then investment in a home production / storage solution.
“But peak demand for oil may take longer than what these politicians would like.”
I agree with this 100%. Peak oil demand may be 10, 15, 20 or more years down the road.
The switch over will be gigantically enormous. Biden, GM & Ford all jumped on the BEV train too early. There easily should have been at least another 10 years focusing on hybrids, especially vehicles like the GM Volt. And what was REALLY needed was a national moonshot / roadmap for solving the AT / AWAY from home charging 800 lb gorilla issue.
I sincerely hope Ford & GM get crushed. They’ll eventually have to agree to some sort of big pay raise that’s only going to make BEVs less affordable in the years ahead. Any price cuts gained from newer batteries will be eroded by these pay increases.
At some point, somebody has got to say enough is enough with all these crazy pay raises. Airline pilots making $200K+ a year getting 40% increases is just absolutely ludicrous.
What’s needed is a good old fashioned Great Recession 2.0, but alas that’s not going to happen. The Fed and Pocahontas / UniParty will make sure it doesn’t happen.
They joined the BEV train too late. The Chinese are going to destroy their export market with cheap EVs. The Chinese have a huge head start that the legacy auto makes will never catch up to.
look at cash flow on BYD. clutching pearls time. it’s a beast.
Why are you so anti-EV? No one is forced to buy them. Anyone can buy a gas car if they choose. Your statement that no one wants them is incorrect. EV sales are rapidly growing. Even Ford is selling a lot more now since they lowered their prices.
And stating they don’t help the environment is asinine. They’re clearly better for the environment. You read stuff backed by the oil and gas industry originally published years ago and you think it’s an accurate reflection of the current EV marketplace.
The only real argument against them is charging time. It’s true that it takes a lot longer to charge an EV than it takes to fill up a tank of gas. But for many charging time is a non issue because they don’t have to wait for the charge to finish. They charge at home or they do other things like shopping or eating while their car is charging. And charging times are going down. In a few years it will likely take 10 minutes on average to go from 20% to 80%.
Youre gonna have to put a lot of volts on a poor little battery to charge it up in 10 minutes. These are also primarily lithium batteries which are not 100% stable, especially if theyve been damaged. I dont waste my time with the environmental argument as they may indeed balance each other out. I go with the peak oil/no cheap oil argument. You want to drive an electric car, or do you not want to drive at all?
Suburbs without vehicles? Housing values going to zero when no one wants your house cause there is no food nearby?
It’s not voltage. It’s amps. And most new EVs can handle up to 50 amps. EV battery fires are extremely rare and new batteries will be LFP which are much less fire prone. Gas cars catch fire more frequently. It’s now news when they catch on fire.
Many that are against Electrics forget that overall its desired including the Manufacturers , including energy suppliers investing in it as a valid profitable choice which the industry well aware of. The investment the industry has built in change has reason that isnt taken likely.
“And stating they don’t help the environment is asinine. They’re clearly better for the environment. ”
link to manhattan.institute
EVs absolutely do absolutely FA for the environment.
That 1000 lb battery in your car requires 500,000 lbs of earth of earth to be dug up and processed. And all done outside of the United States.
To support the climate change,net zero scam requires a permanent structural increase in the use of fossil fuels.
There’s lots of studies that show EVs are better for the environment. One’s with actual calculations. One’s a lot more recent than 3 years ago.
Using diesel.
“Why are you so anti-EV? No one is forced to buy them.:
-Anyone see a definite climate change scam anti ICE agenda by Biden?
-Anyone see a coming further climate change scam anti-ICE agenda as being done by Britain?
link to turbulenttimes.co.uk
“The plan is that next year, 22 percent of new cars sold will have to be electric, rising to more than 50 percent in 2028. It is left to the Independent, though, to tell us that manufacturers who fail to meet the targets will face fines of up to £15,000 per car.”
Again, who’s being forced to buy an EV against their will?
“Anyone can buy a gas car if they choose. Your statement that no one wants them is incorrect. EV sales are rapidly growing.”
Um, let’s be specific about the word “car” means. In the old days, a car had 2 or 4 doors and wasn’t a SUV or truck. So, NO you can’t just go buy any “car” from GM that you’d want to. They don’t make cars anymore. They make more expensive & profitable SUVs & trucks.
EV sales are starting to stall in most parts of the country. Over the next 3-5 years, the growth rate will not meet ANYONE’s expectations. Most consumers don’t want or can afford one. People are finally figuring out that charging them at home & away is not nearly as viable as a dealer may make them think it is in pre-sales.
The fact that most EVs on the road are still a fire hazard per most insurance companies makes them very unaffordable for 85-90% of consumers. And when you add the cost of adding a level 2 charger at your home, things get even worse.
Consumer EV sales are not going through the roof anytime soon. IMHO.
link to anl.gov
Where are EV sales stalling?
The first graph is barely readable.
#2 says cumulative, no?
#3 The orange line is starting to plateau.
And, there’s no YoY or MoM numbers.
Only stall recently was Covid and Chinas drop in manufacturing which effected Gas and diesel production as well. The Path towards technology and change has historical View. Horse & Buggy went away
Sounds like it’s time to short Tesla…
Me, I just like saving money by not buying gas. $3 to go 100 miles works just fine for me!
The Industry differs in view and making huge investments in new Tech because of its value to their bottom line. They might have been wrong in their future Path, , Their Bet
The avg milage of the life of a battery pack of EV’s is 70k miles. Then you need to cough up $20-30k for a new battery pack. Extreme heat and cold, your lucky to get 50% usage, before recharge. There’s no spare tire, you may have to waits hours, if not a whole day, depending on where get the flat. Car insurance on EVs has skyrocketed $3-400 a month for full coverage. You need to spend $5k for an at home charging station. Home owners insurance has skyrocketed if you own an EV, cause they’ve been burning houses down, at an alarming rate…Yup I can see the full advantages of owning a EV…I just saved $50 bucks at the pump.
EV batteries have 100k warranties. And everything else you wrote is completely wrong too. I own 2 EVs so I would know.
The last gas car I bought, a Kia, didn’t have a spare tire.
You can’t reason with a kook, even if you speak the language.
There are plenty of EVs out there with >70,000 miles on them that are still working just fine. Did you just make that up?
70,000 miles isn’t much to brag about .
My Subaru AWD station wagon has 260,000+ miles on it and so far this year I’ve done 4 interstate overnight non stop drives of 700+ miles carrying construction tools with a 5 minute stop for petrol and a leak. And no time to spare as I had to be back on time for my shift.Have any of you EV owners done such interstate runs in your cars or pick ups? Do any of you expect your EV to last more than 260,000 miles and still be roadworthy after 19 years?
I expect 300,000 miles on my Model S in aboaut 12 years. I have gone on trips with it and enjoyed the ride a great deal. I don’t have high pressure time travel to make, so no problem. Model Ss have an aluminum body and will last longer than steel. Motors are made to go a million miles.
Gee, I just spent $10,000 this summer basically rebuilding my 2013 Volt with 133k miles on it. Replaced: front suspension, all four radiators, front brakes, front bearings, brake calipers, hoses, front sway bar, brackets and bushings, front struts, control arms, both CV axles and the engine mount. And yet some of you go 400,000 miles and only have to change your wiper blades. You must have so much content for you Facebook pages! Or you are perhaps exaggerating a little?
Tires wear out faster. I get free supercharging for the life of the car. It seems to break down a little more than average on piddly stuff. Other than that, its a solid car.
The early Nissan leafs had short battery lives. Small battery banks didn’t cost that much to replace though.
EV sales worldwide are booming. Mish statement is pure erroneous. and who cares really. amerikans have turned literally everything they do into some virtue signal. rich world problems.
You forget heating oil futures, which is pretty much the same as diesel — are also rising. Crude oil was the best thing we ever discovered on this planet .. it is PACKED with energy and uses. But if peak oil starts to show its face more and more, and cheap oil is no longer a ***-given right, we need something else … we tried methanol (M85), ethanol (E85) and natgas in the 1990s (I was involved — thats when I found Mish), but nothing took. People are familiar with electricity, but NOT as a driving fuel, and certainly nothing slower than a 2 minute fill-up. The feds are just throwing this to the people and expecting them to understand. They dont and they wont. Electricity as a vehicle fuel is a whole different animal. Better than $20 a gallon gas tho.
I’m still stunned that the unions told their membership to vote for Biden. Biden made it clear he would kill the Keystone pipeline and the tens of thousands of high paying jobs attached to it … so the unions helped put him in … and then got all upset when he killed the pipeline as promised. I think the unions are corrupt, but the rank and file just choose to keep their heads in the sand until they lose their jobs and play obedient bots. The sadder/funnier part is anyone believing that we can vote our way out of this mess. Yes, the democrats are horrible with their unwillingness to understand that unicorn poop is not providing the electricity for EVs … but the republicans really are not a whole lot better.
owners and serfs. the serfs are knuckleheads and believe the owners. for past many centuries.
Can you guess who benefited the most from the shutdown of the Keystone Pipeline?
Warren Buffett one of the biggest donors to the dem party. I think it is just a coincidence though.
I agree just a coincidence though the pipeline would have probably busted his railroad.
Those Citizens that took sued Trans Canada thru US legal system and Won in Court to stop forced loss of their lands, all Biden did was to stop the illegal Presidential override of the system until federal court made its findings. Trans Canada lost in our Federal Courts
Could be the farmers are plowing for winter wheat with Diesel this time of year. Famine justifies plowing fallow fields and pasture.