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

• Refiners Warn of Higher Fuel Price Volatility Ahead

• Oil’s Up Again. Biden’s Out of Options

• Upcoming Oil and Gas Events

• Tweet of the Day

Refiners Warn of Higher Fuel Price Volatility Ahead

Tight refining capacity and outages are causing a spike in fuel price volatility.

That’s according to executives from the downstream industry, who warn, “There is no Plan B.”

Not enough refineries

The last decade saw a series of refinery closures in Europe and the U.S.

Some were converted to biofuel plants.

And now there’s not enough refining capacity to respond to demand.

Except from China. China’s been building refineries while Europe and the U.S. shut them down.

But even with China, the industry is stretched.

This is leading to less scheduled maintenance and, as a result, more unplanned outages.

Especially when margins are high.

Who’d stop a refinery for maintenance when gas and diesel are going up, up, up?

A lot more price spikes ahead

“The market is overly sensitive to any unexpected supply disruption anywhere.”

That’s according to Gunvor’s global head of research, Frederic Lasserle.

Lasserle also said, “We have no stocks, and we have no excess capacity anywhere.”

That doesn’t sound very good.

Especially with an artificially tightened supply of heavy crude from Saudi and Russia.

And with no plans for new refineries.

Who’d dare spend billions and 10+ years on a new refinery with a transition breathing down the industry’s neck?

Since the answer’s “No one,” we might as well brace up for interesting times in fuel prices.

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Oil’s Up Again. Biden’s Out of Options

Oil’s creeping closer to $90 per barrel, and prices at the pump are creeping up as well.

Last year, Biden released oil from the SPR to counter the climb. Now, this option’s out.

High energy prices ahead of the elections are not a good look

Last year, the White House boasted about getting inflation—and fuel prices—under control.

It took more than 180 million barrels of SPR crude to do that, but they did it.

Well, continued Russian oil exports helped a bit, too.

This year, releasing oil from the SPR is not an option.

The SPR is at a 40-year low.

And the Saudis are no longer a trusted friend that would do what you ask them to do.

The problem is that we’re a year away from the next presidential election.

And Democrats have prepared to use Biden’s success in reining in inflation as a key point in the future campaign.

It would be awkward if inflation rebounds.

Which it will unless the oil drops soon.

Only oil’s not dropping soon

Saudi Arabia has made it very clear.

It wants oil prices at or above $90.

It needs this price to make its budget ends meet.

And Riyadh no longer cares what Washington needs.

It’s not like Biden was any good at mending fences after he called Saudi “a pariah state.”

He was, in fact, spectacularly bad at it.

And now we’re all suffering the consequences.

Because here’s the thing.

The U.S. economy, like every economy, runs on diesel.

Diesel needs heavy crude.

U.S. heavy crude is non-existent.

We need Canada and Saudi. The other big producers are all under U.S. sanctions.

Now we’re left with Canada only.

And a half-empty strategic petroleum reserve.

Upcoming Oil & Gas Events

• September 11-14: American School of Gas Measurement Technology, Marriott Houston Westchase, Houston, TX

• September 14: KOGA Fall Meeting, CountryMark Pavillion, MT Vernon, IN

• September 14: PIOGA’s Birds & BBQ Clay shoot, West Penn Sportsmen’s Club, Murrysville, PA

• September 14: Dallas Cowboys Golf Tournament, Cowboys Golf Club, Grapevine, TX

Around the Global Patch

🇿🇦 Debating Africa's energy transition.
🇮🇶 Iraqi Kurdistan's persistent oil outage.
🇷🇺 Russia's trade resilience amid G7 sanctions.

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