ParrotStock's avatar
$257.4m follower assets
Biden calls for more Refinery Production
The problem is that there is no more US capacity.

Nearly 3 million barrels of capacity left the market during the pandemic… and it’s not coming back.

Due to plant deterioration, high labor and material costs, and the huge burden of RENs on the bottom line, not to mention permitting restrictions, we are not adding new capacity anytime soon.

The article notes the last time oil was at $120, gas prices were $0.75 cheaper. Yep, this is not an oil problem, it’s a refining problem, and there just isn’t any more to squeeze out of US capacity. Most companies I know are operating in the high 90% of capacity, and at these prices are pushing for every last drop.

I’m afraid fuel prices are going to remain high for some time. As always, O&G is cyclical, and this time will be no different, but we are in the early innings of the up cycle folks. Invest accordingly.

✌️🦜

Rihard Jarc's avatar
as you are an insider I really like seeing your view on this. If you would invest right now in the O&G industry where would you put your money? refiners?
ParrotStock's avatar
@rihardjarc yes, I think the biggest advantage is to refiners currently, and potentially O&G service companies that have struggled the past few years.
Scoreboard Investor's avatar
Agree. I’m doing some work in oil & gas now and starting to learn about some of the dynamics. I am quickly realizing capacity constraints are huge and drilling regulations are an impediment.
sam stribling's avatar
sam stribling's avatar
Sounded an awful lot like a big middle finger to the administration to me
ParrotStock's avatar
@strib exactly what I’ve been saying. Oil companies barely survived the last few years, now being chastised for trying to make back some of the money they spent. A cohesive long term (and more importantly consistent) policy would go a long way to stabilize prices; but it will take time.
sam stribling's avatar
@parrot Bingo. We need some refinery investment more than anything in my opinion but why would they spend all that money when the party line is "Time to phase out fossil fuels" if I were in there shoes I wouldn't be exactly lining up to spend billions on something that could get canceled or is being "phased out".
Edmund Simms's avatar
Crack spreads are incredible right now. I wonder how long they'll last
ParrotStock's avatar
@valuabl never before seen spreads. The highest is ever seen was high $20’s; they are up to $60 right now. Crazy. I think they will stay in the $20+ range for some time (into 2024 at least)
sam stribling's avatar
@valuabl what is a crack spread… asking for a friend lol
Edmund Simms's avatar
@strib It's 1g of pure cocaine minus 1g of crack cocaine.

Actually, it's the spread between the price of what a barrel of oil becomes, distillate and heating oil/gasoline, and the cost of a raw barrel of crude. Typically refiners make about $20 per barrel, but now they're making $60. It signals excess consumer demand without excess refiner demand.
sam stribling's avatar
@valuabl 😂 to the first definition and the second one makes sense. Learned something new.

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