Fuel prices are high because the Straight of Hormuz is still closed. There are no real negotiations going on. Except self dealing by Jared Kushner and Steve Witkoff. 70% of the US refineries are set up for heavy or “sour” crude oil which is high in sulfur, which we generally get from the Middle East. We are at tank bottom when it comes to the heavy crude so mixing it with the light shale oil or the light oil that is produced in the Permian Basin in Texas is difficult. The bottom of the tanks are unusable sludge. So we have 30% refining capability for domestic oil product needs. The oil pumped from platforms offshore in California are a heavy high sulfur oil, which is why Donald Trump is pushing so hard to start pumping it. The Gulf of Mexico produces both heavy and light crude which in recent years we have slowed production for good reason in those areas.
Here is a breakdown which I got from chat GBT of how light cruse is used.
Over 85% of a 42-gallon barrel of light crude oil is refined into various fuels. The remaining yield produces materials like asphalt, lubricants, and petrochemical feedstocks for plastics.Because the refining process causes a volume expansion, a single barrel yields about 45 gallons of petroleum products.The average breakdown of products from a single barrel includes:Gasoline: ~43% to 45% (about 19 gallons) for automobiles.Diesel and Heating Oil (Distillates): ~25% to 29% (about 11–12 gallons).Jet Fuel / Kerosene: ~7% to 9% (about 4 gallons).Hydrocarbon Gas Liquids (HGL): ~4% to 8% (about 2 gallons) used for propane, butane, and plastic feedstock.Asphalt and Road Oil: ~3% to 4% (about 1.5 gallons).Other Products: ~4% to 8% (about 2.5 gallons) including petrochemicals, lubricants, and petroleum coke.
Back to me. The oil companies are buying heavy crude from Venezuela, Mexico and Canada, and are paying a premium for it. If anything oil prices are being kept artificially low because the markets believe Donald Trump when he says we’re negotiating with Iran and that the straight will open. The United States has an advantage to other countries like Europe because of our proximity to South America, Mexico and Canada but again we are paying a premium for 70% of our refineries to keep producing. Good news is that we won’t run out of fuel in the US it will be more expensive for a long time. This doesn’t take into account aviation fuel in California which around 20% is imported from South Korea because of a lack of pipelines from other parts of the country and because California is closing refineries.
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