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

• White House Freaks Out over Gas Prices

• Diesel Doom is Coming

• Upcoming Oil and Gas Events

• Tweet of the Day

White House Freaks Out over Gas Prices

With gas prices surging, the White House has once again reached out to the oil industry for help.

They didn’t exactly put it this way, of course.

"The Energy Department is in touch with producers and refiners to resolve any issues and to try to ensure stable supply," is how they put it.

All fun and games until gas jumps

Gasoline prices rose by 10.6% last month, accounting for half of overall inflation.

That rose by the most in 14 months, by the way.

No wonder the White House freaked out.

And who’re they gonna call?

The oil and gas industry, of course.

Ask them nicely to boost production faster.

Judging by the API’s response to the news.

What the API said was that the Biden administration had "taken every opportunity to restrict production both now and in the future."

Ouch.

It’s give-and-take, not take-and-take

It’s actually amazing the White House thought asking for more oil would work.

Just like that.

I mean, it’s not like it worked last year.

And the reason it didn’t work is that the API is right.

The federal government has done its best to clip the wings of a whole industry.

And then it wonders why prices are high.

Sure, it’s the Saudis and the Russians.

But if the wing-clipping hadn’t happened, U.S. producers would have been happy to step in and step up.

Now, they’re too unsure of what the future holds with all the transition dreams.

Why risk faster expansion?

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Diesel Doom is Coming

Global distillate stocks are dangerously low despite a slowdown in industrial activity.

This may well mean more inflation pain ahead.

The workhorse of every economy

Diesel is the fuel on which every economy, from the most advanced to the most backward, runs.

Trucks run on diesel. Industrial machines run on diesel. Ships run on a similar fuel.

Good old middle distillates.

And now there’s a lot less of them than normally.

In the U.S., stocks are 16% below the 10-year average for August.

In Europe, stocks are 8% lower than the 10-year average.

And here’s the worst part.

Distillate stocks are down even as industrial activity has slowed down in both the U.S. and Europe.

In other words, demand for distillates is down, but so is supply.

This is not a great situation.

That’s what happens when you shut down refineries

This is the reason there is a shortage of distillates ahead of peak demand season for heating oil.

There are not enough refineries to produce them.

The Saudi cuts are not helping, either, but the big reason is the lack of refineries.

Because some got shut down during the pandemic when peak oil demand was all the rage.

Then, others got converted to biofuel plants because biofuels are all the rage.

Oil demand did not peak, and synthetic fuel still rules.

But once you close a refinery, you can’t just restart it like that.

That’s why we can’t have nice things like affordable fuel.

And that’s why we’re probably in for even higher inflation.

Upcoming Oil & Gas Events

• September 17-20: GPA Midstream Annual Convention, San Antonio Marriott Rivercenter, San Antonio, TX

• September 17-21: 24th World Petroleum Conference, Stampede Park, Calgary, Canada

• September 19-21: North Dakota Petroleum Council Annual Meeting, Watford City, ND

• September 21: Southeast Ohio Oil and Gas Association Annual Trade Show, Marietta, OH

Around the Global Patch

🇫🇷 France contemplates curbing oil refiner profits.
🇨🇳 China's nuclear ambitions vs. coal addiction.
🇷🇺 Armenia-Azerbaijan tensions escalate over Lachin road blockade.

Tweet of the Day

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