Posted on 05/16/2022 9:27:22 AM PDT by blam
US retail gasoline prices soared to another record on Monday as global refineries struggled with adding new capacity ahead of the driving season.
Before diving into Goldman Sachs’ new commodity note explaining how global refining will be tight for the foreseeable future, last week, Saudi Energy Minister said, “the bottleneck is now to do with refining … many refineries in the world, especially in Europe and the US, have closed.”
Goldman’s commodity analyst Neil Mehta outlines a rash of refinery retirements, reduced Russian energy exports, recovering jet fuel demand, and tight global inventories for products, particularly diesel, have supported higher retail fuel prices.
Mehta points out US product inventories are below a 10% five-year average, refining utilization rates are below normal, global natural gas prices are high, and demand for diesel remains robust.
US product and total inventories are well below a five-year average.
US refining utilization struggles to increase as the driving season begins.
“We believe the oil market needs to price to demand destruction, which will drive the least elastic prices, such as those for distillate, higher,” he said, adding tight inventories could last through this year and well into 2023.
While the demand destruction has not begun yet (from what we have seen in the data), the price adjustments for refined products is starting to reprice drastically (in barrel equivalents below for easy comparisons)…
A lack of refinery capacity is the culprit of rising fuel prices. The average cost of US gas prices at the pump on Monday morning is $4.483 and $5.56 for diesel.
Today’s refinery bottlenecks may suggest that even higher prices are ahead this summer as the driving season begins.
Is Biden’s name anywhere in this?
The POTATUS isn’t running things.
Memorial Day is coming...
russia russia russia
climate change, climate change climate change
blah blah blah
WTF is driving season? I drive year round.
From what I’m reading, a number of refiners have been “incentivised” by the market distortions created by the “zero-carbon” policies of US and European governments to close older refineries rather than update them.
The damage done by the envirowhackos will far exceed anything that actual global warming can do to us.
They mean the summer vacation season. Apparently much more gasoline is used in the summer than other times of year, which is attributed to people driving on their vacations.
“I drive year round”
Not if they get their way your not.
They ought to call it “road-trip season”.
who can afford vacations? have you seen fuel prices? /s
School’s out - Vacation time!
There hasn’t been a new refinery built in the US in decades. If these companies are closing the old ones down, we’re completely screwed.
Oil stocks soaring today.
And just wait until his second term. He’s just getting started
gotta build new ev infrastructure and do it again...
“The POTATUS isn’t running things.”
I get to differ. Despite his obvious mental issues (going way back) he is firmly in charge. This is what he wants and has assembled the marxist goons to wreck the nation to rebuild it in his disgusting image.
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