Good morning, here's what the Oilman has for you today:

• Massive Refinery Maintenance Season Is Coming

• Brace Up for Carbon Pricing

• Upcoming Oil and Gas Events

• Tweet of the Day

Massive Refinery Maintenance Season Is Coming

Refiners are going to shut down 2.5 million bpd in capacity for maintenance between now and Christmas.

That’s after two years of urgent-only maintenance during the pandemic.

And diesel is already in short supply.

There will never be a good time for it

During the pandemic, refiners didn’t dare close for regular maintenance because it costs money.

Those were difficult times for the industry – shutting down was not something you could afford.

Then came the rebound, and margins soared.

This time, refiners had to keep going to make up for the lean days.

Of course, you can delay maintenance for some time, but you can’t delay it forever.

Leaks and unplanned outages have become more frequent this year, hence the massive maintenance season.

According to some, Q1 2024 will be even busier for refinery maintenance.

Fuel shortages on the way

When refineries shut down for maintenance, they don’t produce gasoline and diesel.

Gasoline should be fine, with peak demand season over.

Not so with diesel.

Diesel stocks in the U.S. have been tight for a year now.

Despite the manufacturing slowdown.

And now, with millions of barrels in refining capacity due to go offline for months, the tightness is going to get even tighter.

But there’s nothing refiners can do about it.

As Andy Lipow from Lipow Oil Associates put it to Bloomberg,

“The day of reckoning has come. Now they have to do maintenance.”

And you and I won’t have to wonder why groceries are getting more expensive still.

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Brace Up for Carbon Pricing

Putting a price on carbon is popular in some circles, including Big Oil.

It’s not so popular among people.

Yet, per a new report by the IMF, it must become part of transition efforts.

It’s either that or no transition.

There’s a limit to what subsidies can do

Governments pushing the transition have all gone about it the same way.

With subsidies and public spending.

But this, according to the IMF, is unsustainable.

The transition is no cheap venture.

It is, in fact, so expensive that if governments stay the course, we might see debt-to-GDP ratios of 50%.

Obviously, this is not something a government wants to witness.

The alternative, per the IMF, is carbon pricing – a source of revenue to counter the drain that is subsidies.

You’ve got to hand it to governments – first, they create a problem, then come up with the solution.

A risky trade-off

Putting a price on carbon dioxide might have a nice ring of money in the bank to it, but it’s risky.

The biggest problem is that it would fuel inflation because all businesses forced to pay for their emissions will pass that cost on to consumers.

This always happens. No reason to expect this time will be an exception.

And this means that the government that tries carbon pricing could end up with less money rather than more.

Inflation tends to do that.

Just look at the EU: they’ve got a price on carbon.

It’s been so bad for local companies the EU had to impose a carbon tax on importers to even the playing field.

Upcoming Oil & Gas Events

• October 1-5: 2023 SGA GMRC Gas Machinery Conference, Phoenix, AZ

• October 2-6: SPE Gulf Coast Section-Electric Submersible Pumps, The Woodlands, TX

• October 8-10: New Mexico Oil & Gas Association Annual Meeting, Santa Fe, NM

• October 12: Arkansas Independent Producers & Royalty Owners Association Annual Meeting, Little Rock, AR

• October 12: Indiana Oil & Gas Association Annual Meeting, New Harmony, IN

• October 12: Oklahoma Oil and Gas Expo, Bennet Event Center, Oklahoma City, OK

Around the Global Patch

🇦🇺 NSW's first renewable energy zone submits EIS.
🇭🇺 Hungary supports Bosnian Serb wind farm.
🇷🇺 Russia imposes further strain on European duo over Siberian assets.

Tweet of the Day

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