Oil Executives Say the Great Fuel Crisis Is Here
wsj.com
wsj.com
The issue here is that we based our entire economy around a substance that is incredibly price-volatile, run by a cartel, and is plentiful mostly in places that are unstable or hostile to us. I think it’s crazy that we’ve completely normalized the idea that fuel needs to have prices listed outside a gas station because it changes so frequently. Imagine if supermarkets had to list the price of a loaf of bread outside because it kept changing so often.
And it’s really our own fault (or at least the fault of politicians bought by oil companies) because the dangers of oil dependence were obvious at least back in the 70s.
The paradox is that it _can_ cause worse traffic, not that it always does. American cities are built like shit for transport, but it's not as simple as "roads too big, therefore traffic". Sprawl is a much bigger (and more difficult to do ~anything about) issue.
Plentiful in places we keep making unstable and hostile to us by bombing.
https://www.history.navy.mil/browse-by-topic/wars-conflicts-...
The enmity between "the West" and "the middle east" goes back to the islamic colonisation era which created a religious incentive to "fight the infidels" and/or plunder and enslave them.
Some it was true, but most times it also cost your life. Never simple.
They're competent enough to be able to model the demand destruction occuring globally.
In the meantime, given "Canada supplied the U.S. with more than 60 per cent of its crude oil imports last year," Canada's oil bonanza may not only make up for their tariff losses but actually put them into a net surplus [1].
[1] https://www.cbc.ca/news/politics/canada-oil-prices-trump-ira...
Pretty sure at the moment their solution is to shout about this far and wide so when it actually happens they don't get lynched by the crowd.
This has never worked before. Why not? Because the government, who are responsible this time and previous times, are going to blame them because they "set the price" (except of course they set the last 1% or so of the price, which makes them a very nice profit, the 99% is the government, for example, there isn't a single EU country that doesn't levy a 80% tax on fuel, so the government could just halve the price. Could ... but won't.
This is disregarding that obviously one way to look both wars, in Ukraine, the problem is EU governments failing to come to a workable relationship with Russia, and Iran and Trump, well does it even need to be said? Despite the news, I will say that the Ukraine war in Europe is by far the bigger factor. Obviously both wars fundamentally are failures of politicians to do what they're supposedly good at, come to acceptable solutions for everyone. And this accounts for ~60% of the price of oil before any other tax ...
These taxes are part of the reason Russia and Iran are making war and every other oil nation complains constantly. They find this unfair, given that it's their oil that's being sold. They're still bound by market forces, meaning the price is determined by supply and demand like any other product, BUT supply is artificially and drastically made more expensive than it really is, and that money doesn't benefit who it benefits for every other product (ie. not the producer, not even the producer country's government). Per liter the costs are about:
€0.02 Saudi lifting
€0.04 Saudi upstream investment
€0.52 crude resource/market value
€0.05–0.07 physical refining
€0.02–0.04 refinery capital/maintenance/compliance
~€0.25 exceptional current refining/product scarcity spread
~€0.05 ethanol/blending/product logistics/etc.
€0.23 Belgian distribution
€0.014 strategic stocks
€0.60 excise
€0.382 VAT
Who profits?
Saudi government (much better than almost all other producers): 0.46 euro per liter (of that, you can never be absolutely sure, but arguably about 0.3 euro per liter is due to EU and US politicians not managing to prevent wars with oil producers)
Oil companies REVENUE (of which 6% or so is profit): 0.25 (this 0.25 is ENTIRELY due to the wars as well, not because supply is limited but because oil companies are forced to start from inferior products) + 0.23 + 0.05 = 0.52
The total amount of the 2 above is constant, because global market, but the split between oil companies and governments varies, and is generally much worse to oil producer governments.
Standard EU government cut, taking Belgium example (because Brussels = Belgium): 0.60 + 0.382 + 0.014
The "real" oil price RIGHT NOW (with the war price hikes) is about 0.5 euros per liter. That includes the massive oil company profits. 0.46 (or less) goes to governments of oil producing nations, 0.99 goes to the government where the oil is sold as fuel. And this is being nice, counting the 0.05 ethanol as oil company revenue when this is only done because of government demands.
A great gesture would be to, say, limit the excise tax to 0.4 (which is still more than the government got 1st Jan 2023, before the governments' failures)
On the plus side, this is probably the "last hurrah" for the oil market. If/when these wars end, oil price will halve (gas prices will only come down to like 1.6, 1.7 per liter though, because excise tax never goes down). Despite that, this will still kill the energy tax for governments ... which they'll need to make up.
Hence an obvious but counterintuitive prediction: when the Ukraine war ends, EU and US governments will start taxing solar power.
1) "suck up to Russia" (or let's put it politely: have a working economic relationship with Russia)
2) actually END THE WAR, as in honestly say to people that we're going to war, because that's exactly what EU sanctions are going to accomplish, and understand that this is what 10% or more of the economy will be dedicated to that for let's say a decade, and of course, missiles will be coming in for that time.
I would even go so far to say that it seems to me likely in the extreme that Germany, and by that I mean Schroeder and Merkel, promised Russia they would be allowed to conquer Ukraine (look at their UN votes after the Crimea annexation for example) ... and obviously they didn't deliver, and that, combined with Ukraine actually managing to save themselves against German wishes, is what's making the Ukraine war happen.
The reaction of Germany to this? To prepare for war, of course. Note: war, as in marching German soldiers into war. NOT defending Ukraine.
Like in any war I've ever seen, all actors in the Ukraine war have despicable behavior. They're not "equal" morally in any shape or form, but none of the actors are behaving morally, even judged by their own morals. Russia is by far the worst, then Germany, and Ukraine is mostly a victim (but that hasn't stopped them from making a few very questionable decisions either)
My problem with sanctions is the following. Russia, when push comes to shove, is trading oil with the EU because it economically benefits them. Why do they go to war? Frankly, to avoid these taxes. If you look deep down, that's the reason.
Let's assume sanctions aren't more than Russia can handle (as in, strong enough to bring the Russian state down), and EU sanctions aren't, then what do sanctions actually do?
They increase Russia's reasons to go to war with the EU while still allowing Russia's army to become stronger. Increasing both the ability and the appetite of the Kremlin to attack. Hence, why I'm saying the sanctions are effectively trying to get Russia to start a war with the EU.
And you're not telling me anyone who's good enough of a negotiator to get into parliament or government doesn't understand this DAMN well.
Germany is purposefully causing a war between the EU and Russia because
1) it doesn't require a budget item to be approved. It's cheap.
2) they don't look like that's what they're doing. Especially not to young Germans (who will be doing all the dying), in fact they look like they're doing something to end war and get to peace
And the worst of it is: Ukraine might actually save Germany's ass, and do the dying for them. That was never part of the plan, but they'll take it, of course (while STILL saving on the expense of supporting Ukraine, of course)
"So on short: Russia invaded the Ukraine because why not, ..."
Believe it or not, Putin is a mass murderer. But even a mass murderer needs a good reason to spend 70%+ of a country's total income on destroying everything in sight for 8 years flat.
And as for guilt. "Why not" in your argument, includes France, US, UK and Germany vetoing any kind of serious reaction to Russia invading and annexing Crimea despite having signed agreements they would ... and then modifying those agreements afterward. You call that moral? Especially given that it's obviously exactly this that set off the rearmament spiral that the EU is now joining.
Currently russian war is eating close to 50% of their federal budget. That's WW2 levels of militarism for nearly zero gain (current battlefield status, not 2022-2025) and huge manpower and infrastructure losses.
> Germany is purposefully causing a war between the EU and Russia because
No, Germany does what it does because it has no strong or even good leaders and failed to adapt to current circumstances. There is no purpose.
> young Germans (who will be doing all the dying)
They won't.
Politicians are failing because majority can't even acknowledge the complexity. More worried about saving themselves then speaking candidly. There are a few that do, but sabotaged by the rest.
If by "we" you mean the United States, it's worth noting that the US is a net exporter of fuel products and our net imports of crude oil have dropped a lot.
> Imagine if supermarkets had to list the price of a loaf of bread outside because it kept changing so often.
This actually happens when prices become volatile. Not long ago I could see the prices of eggs posted outside different stores on my drive home.
I don't think they'll post bread prices outside when the hyper inflation starts, they'll just use e-ink digital price tags.
But you won't have to wait long for food prices to become wildly volatile in the upward direction...
As the price of diesel fuel continues to skyrocket, so will the the price of bread (and every other physical item you buy).
People think inflation is bad now, later this year and in 2027 it is going to be so, so much worse on the current trajectory.
First step - you'll need copper so we can have enough generators, power for DCs, EVs, etc. Current world capacity 23 million tones per year and supplies are shaky due to concentration in rocks going down, but we need additional 10 million tons of capacity by 2035. How many copper mines are you opening? Are you going to subsidize the workers to a tune of $100 per hour?
Ukrainian attacks on Russian oil refineries. That's not particularly American election issue.
Energy prices are absolutely an American election issue. Variations in real personal disposable income growth and inflation predict a vast majority of the variation in election outcomes after accounting for incumbency.
And Iranian proxies seizing the Bab el-Mandeb–and the U.S. being unable to help Saudi Arabia respond militarily while Iran cements control of the Strait of Hormuz–is the direct result of an American foreign policy choice to, once again, blunder into a war in the Middle East.
Imho a peace over the old borders could have been possible without additional destabilisation from the US. The Iran war made that impossible. Hopefully a peaceful resolution can still be found, quickly.
Given the Iran war and Israels genocide only being possible through US support I'd say the US has a pretty big hand in the matter.
I kinda hope they bring back the old idea that oil is actually formed out of non-biological matter and so that means its just basically infinitly seeping up from the earth, we just have to drill a bit deeper. But I think that's a little too nerdy for them
It was only about 3 years ago when I learned that petroleum comes from almost anything organic. So, ferns and trees and moss, in addition to Velociraptor and Triceratops, I guess?
https://files.eric.ed.gov/fulltext/ED343791.pdf?utm_source=c...
Single-digit percentage points of turnout changes would swing the House and Senate. Double-digit percentage changes in voter turnout, as in 15 to 30 percent of unlikely-to-vote registered voters turning out for Democrats in deep-red Republican stronghods like Alabama and Mississippi, gives Democrats a Congressional supermajority.
MAGA voters aren't dropping their identity for a while. Possibly never. Most voters who aren't registered or don't vote are lazy and nihilstic and worth ignoring. But a tenth should be pitchable. In a reach, a third of them could find motivation.
i swear to gods, the australian method of mandatory voting is the benchmark best way to do it.
Small nitpick: while Trump won the popular vote, he did not earn over 50% of the votes. There were enough third-party votes that he won with only 49.8%.
Only 65.1% of eligible voting-age citizens even voted. And of that 65.1% only 49.8% voted for Trump.
Gas is expensive. Food is expensive. Insurance is expensive. People will vote for whoever claims they'll lower prices, which usually means deregulation in the United States.
We have been borrowing against the environment for generations. Every burger we eat is a loan on the future. Every excessive piece of plastic that makes our lives more convenient is a loan on the future. No way in hell the average consumer chooses to give up anything while the rich and the politicians do nothing. Social media has convinced too many people that others are to blame and it's not their fault. Nobody will sacrifice their privilege while others carry on.
The time to take meaningful action was 40+ years ago. We are long past voters making a difference. Society needs to change drastically and now. That simply is not going to happen.
Trucks will stop delivering trash (ex. China dollar store crap, lower margin non food items and a billion other nonessential items). Food prices go up, people will do without less desserts or fancy foods but enough deliveries continue with the fuel saved that no one starves.
Now imagine if we replaced only 10% of diesel trucks with electric. Hell just focus on the short haul trucks. That unburned diesel could have helped buffer the remaining fleet.
diesel is widely used for things like shipping and other supply chain stuff, so expect knock-on price impacts.
semi-trucks might be viable electrically, none of the other options currently are.
it wouldn’t be impossible to electrify, but outside of a few specific intra-city corridors, no one has spent the capital to try.
$5500 in solar panels including a battery would be just enough to keep the AC on all summer, and that's being fairly high on the temperature, around 26.
So based on cost alone and not power draw, with the AC off you could comfortably power a fridge, PC, and water heater, I guess? But I'm talking out my ass here
https://en.wikipedia.org/wiki/Solar_power_at_the_White_House...
It is also true that solar water heating has unpleasant failure modes.
The issue is winter: It gets down to -25c and there is very little sun (not that it would help due to snow on the panels). In January and February this year I generated a grand total of 5kWh :D
However my house is a new house, it's designed to modern building standards and has 30cm of PIR insulation in the walls and even more in the roof. There's just no way to properly renovate old buildings to be like that without basically rebuilding the whole thing. The actual cost of materials is not expensive though (for the west). In milder climates (UK I'm looking at you) there's really no reason all new houses cannot be net-zero.
Meanwhile, we have, in Europe a lot of buildings from late 19, early 20th century that are perfectly habitable today and often are ruined by modern standards that not respect old standards. For example basement addition that prevents the apartments from “breathing” and causes them to become damp.
On the global market, you can get the equipment for much less, the same inverter is a fraction of the cost that the UL listed American company version costs, the panels are a good bit less. But in the US, this stuff gets marked up pretty hard.
If your main load is for summer A/C, with a mild winter, the generation and usage line up much better.
That said, we're hitting 2030 with ~20% of American electricity coming from solar and wind versus 40 to 60% under the IRA baselines. We may wind up in a long-term spiral where our adversaries have not only more manufacturing capability and structurally lower labour costs, but structurally cheaper energy, too.
[1] https://seia.org/research-resources/us-solar-market-insight/
It takes a lot more than $5K to build a system that can replace a household's energy use. For 24 hour coverage you need substantial battery capacity, too.
To cover theoretical EV charging it gets even more expensive.
Prices continue to come down, but it still takes a lot to actually replace all of a household's energy usage with solar.
I live in the east bay and my trips to the ocean and Tahoe have dropped to zero.
US Sees Diesel Stocks Falling to 2003 Low Ahead of Peak Demand - https://www.bloomberg.com/news/articles/2026-09-09/us-sees-d... | https://archive.today/Dmnid - September 9th, 2026
E10 petrol is £1.64/L, for ref.
If a resolution to the conflict is not reached in very short order (i.e. days, not weeks), the crisis will be in full swing right when the midterms are going on. Of course, foresight and the ability to understand consequences do not seem to be strong points of this administration.
* Houthis have taken control of all of the Yemeni coastline along the Bab-el-Mandeb Strait (and an island in the middle of it), which gives them the ability to effectively interdict trade through the Red Sea and the Suez Canal, just as Iran has shut down the Strait of Hormuz.
* Not that it matters that much, because the Saudi pipeline that lets it export crude via Yanbu, in the Red Sea, has been disabled, and current estimates suggest that the recovery time is in weeks-to-months. That's about 4-5mbpd of crude oil that's down for the near feature, or about 4% of global crude oil production.
* Now that the summer driving season is over, US refineries are starting to switch from summer blends to winter blends, and this is one of the periods that refineries go down for maintenance. So US refinery capacity is down.
* The supply shock has been mitigated for the past several months by drawing down reserves (note that reserves were relatively high when the war started). This includes both national strategic petroleum reserves, but also corporate reserves (e.g., tanks on-site at refineries). It seems some of these reserves are starting to hit effective 0.
* On top of this, Trump is making it more and more clear that he has no intention of actually doing anything to end to the crisis. For example, he's effectively said that he's not going to do anything before the midterm elections, two months away. Which means the market optimism that the war is going to be over, like, tomorrow is fading.