5 ms·

I think what's missing here is the second order effects. refiners will adjust their crack, use blending etc but that's just a rounding error. you're still goin

I think what's missing here is the second order effects. refiners will adjust their crack, use blending etc but that's just a rounding error. you're still going to have demand for the other ~60% of the barrel, so refiners are going to have ~40% of the barrel to find a market for, EV's are going to look a lot less appealing when gallon of gas is <$1 (or ~$8 an mmbtu), and when its that price, people will find all sorts of uses for it (that's like ~1/2 the price of europe/parts of asia), all of a sudden people are going to be burning gasoline for power etc. it'll be a roller coaster for sure, but i think there are going to a lot of interesting substations and knock on effects.

jillesvangurp 1mo ago
A lot of especially the US market needs high oil prices to justify production cost. Some refiners might actually reduce capacity rather than sell below cost levels or at lower margins. The reality is probably going to be lots of price uncertainty (even more than today) and increasingly flaky supply chains as refiners and oil producers gradually reduce capacity to keep prices high enough to stay in business. As that happens, investments in refineries become more risky as well. Because if you can't rely on lucrative fuel sales anymore, that's a big problem for long term viability of a refinery. Before cars started burning petrol at scale, refiners were occasionally dumping fuel in rivers. It was just a worthless by product. All the money was in things like kerosene.