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

• U.S. Refiners are Making a Killing

• Transition Suffers Investment Shortage

• Tweet of the Day

U.S. Refiners are Making a Killing

The U.S. refining industry is going through a renaissance.

Margins are high, feedstocks are cheap, and demand is on the rise.

Thanks to the Red Sea crisis.

It’s a seller’s market out there

The Houthi attacks on ships in the Red Sea prompted a shift in maritime transport.

Now, most ships are going around Africa.

That’s adding weeks to journeys—and tons to fuel demand.

No wonder the crack spread for U.S. refiners has gone up to a comfy $30 per barrel.

And no wonder refiner stocks are rising by high double-digits.

Marathon Petroleum is up 45% in the year to date.

Valero has gained 39%, and Phillips 66 has seen its stock rise by 30%.

Not too shabby for an industry that’s supposed to be on its deathbed.

You know, because of peak oil demand and all that.

Those lucky few

U.S. refiners have a massive advantage over competitors.

They have an abundant local supply of crude.

Then there’s a nearby additional supply of Canadian crude.

And South America is also close by for that diversity of supply.

But U.S. refiners also have cheap nat gas supply.

It’s for that hydrogen that makes diesel lower sulfur.

And now, driving season is around the corner.

Demand will probably increase.

So those crack spreads will jump even higher—and so will refiner stocks.

Those that rushed to convert their refineries into biofuel plants are probably biting themselves now.

Transition Suffers Investment Shortage

Not enough money is being invested in the energy transition.

The grim warning comes from—you guessed it—a climate think tank.

Basically, energy demand is rising faster than the world is building wind and solar.

It’s a tragedy.

Double the money or miss the Paris Agreement target

Last year saw some $600 billion poured into transition efforts.

But this needs to more than double to $1.3 trillion for the 1.5-degree scenario to pan out.

That’s according to a think tank named REN21.

“We aren’t even reaching 50% of what’s needed annually,” the group’s executive director said.

“Governments have committed, but this needs to be followed by action.”

The action, however, needs to come from private capital.

Because governments don’t have the money.

Weird that private capital is not delivering.

Or maybe not so weird as returns on green investments fail to live up to the hype.

The horror: investment still flows into oil and gas

Investment in things like wind, solar, and hydrogen is running at a record high.

And it’s still not high enough.

But what probably angers climate think tanks the most is that investment continues in oil and gas.

There’s a belief in those circles that if only we could redirect this money to the transition, all would be well.

The reason that’s not happening is simple.

Enough people know that not all will be well if we do that.

We’d swing into a global energy shortage so fast and so bad the economy would collapse.

And that’s why money keeps flowing into oil and gas.

Tweet of the Day

Thanks for reading today's Oil Patch!

Stay oily, my friend.

Two quick requests before you go:

• If you found this useful, forward this email to a friend to spread the word. 👇

• Take 1 second to answer the poll below 👇👇