Refinery Explosion Outside Of New Orleans May Cause Gas Price Spikes

Added: 2026-05-12

[00:00:00]Okay, I don't know what it is. I don't know if it's intuition or just dumb luck, maybe a little bit of experience, but I've been for the last week, I've been saying, you know, if we lose a refinery in this country, we're we're going to have a problem because, you know, gasoline diesel markets are really tight and in tight markets like this, any interruption in gasoline or diesel production can lead to higher prices. And of course, it happens. So, uh, I believe the last time I said it was on a podcast, the American Power podcast that just dropped the other day.

[00:00:35]I said something along the lines of, you know, markets are really tight. If we lose a refinery, things could get western. I don't know exactly what I said, but I said something along those lines. And of course, we lose a refinery outside of New Orleans, Louisiana. Yesterday, the PBF energy uh facility had an explosion. I believe it was in the reformer.

[00:00:58]Now, this refinery is I would call it a midsize refinery, which is actually good news. It's not one of the great big refineries, which would have a massive impact on us, but it is a midsize refinery. And the tightness of the markets does sort of elevate um the problem with this refinery going down and losing 90 to 100,000 barrels a day of gasoline at that refinery. I don't know that we're going to lose diesel production because I don't have a clear picture of all of the damage that was done left.

[00:01:35]But if the reformer exploded, they're not making any gas. I know that. So, we'll see the extent of the damage what happens.

[00:01:46]But we did have, you know, a refinery explosion in a very tight market. And that is not good, especially if you live in the Gulf Coast or the Midwest, which is what this refinery or the areas that this refinery largely services. And I don't know how long it's going to be down yet. This is still very new. But I would expect to see uh you know price spikes definitely on the Gulf Coast and definitely in the Midwest. And this is coinciding with price spikes that are happening again in the Great Lakes area where in many states in the Great Lakes area they're seeing diesel upwards of 650 a gallon.

[00:02:32]And here's the thing, this isn't about one facility.

[00:02:38]This is about an entire system that's already stretched out.

[00:02:46]You know, the reason we see, you know, a lot of people are very conspiratorial about this, but the truth is the reason we see a lot of failures, fires, and explosions at refineries when markets are really tight is because we're pushing those refineries.

[00:03:06]They're running at very high capacities, working as hard as they possibly can.

[00:03:13]That is a cause of a lot of the failures that occur during times like this. And so we had refinery failure at the refinery in Whiting, Indiana. And now we have this explosion.

[00:03:28]Was it about a month ago? The Valero refinery explosion.

[00:03:34]Um, so this is actually something that can continue because the other refineries that are still running can't produce anything more like to make up for that. So we have that loss and we also have an elevated risk of more refineries of losing more refineries and we can at this point we really just hope that we don't lose anymore. But I do expect to see some type of gas price spikes from this. U but these you know refineries aren't interchangeable. That that's you can't just shift production like I said from from one to another.

[00:04:21]That's that's not how they work. Uh they're configured for specific slates of crude oil or blends of crude oil to produce specific products and serve specific regions and markets.

[00:04:38]And that refinery, as I said, serves the Gulf Coast, a lot of the Southeast and parts of the Midwest.

[00:04:44]And those markets don't currently have like a backup plan.

[00:04:49]markets are already tight and so now they're going to be tighter and and we'll just have to see over the coming days what happens with wholesale gas prices um in those regions.

[00:05:03]And so here's sort of the down and dirty cruel math of refinery economics. When a refinery goes down unexpectedly, as I said, the remaining refineries in the region, they can't just run harder.

[00:05:21]Uh they're already running at near capacity.

[00:05:25]We've been running at plus 90% capacity for months. So, there's no spare capacity. There's no way to replace that loss.

[00:05:35]Prices will typically spike.

[00:05:38]And that's not something that's going to happen over weeks. That's that's going to happen immediately as you could probably guess because traders know the math, right? Uh wholesale gasoline is already at four-ear highs. Um it's it's likely to jump a lot again on Monday. My real concern is that this continues to happen. I my first real concern is if the diesel is shut down too because that's a very t tight market as well. Uh another refinery explosion.

[00:06:14]What else is happening? We're heading into summer driver season time of the year when gasoline demand peaks. We've talked about this. That's an additional nearly million barrels a day of demand that happens during the summer. Schools going to be letting out in some places around the country. I mean, there may already be some places where school is out, but I know next week, next week here in just a few days, school will be out in a in several places, especially in the southern part of the country, where the refinery exploded, where the demand will increase the most and the earliest, where families were going to be taking road trips, people are going to be driving more. demand is going to go up in the areas that this refinery serves.

[00:07:09]And we just lost about another probably best estimate 90,000 barrels a day. They they can produce up to 100, but they were probably producing 90.

[00:07:23]And this is what happens when you have to run a system with with literally no margin for error, which is what we're doing right now.

[00:07:31]We're exporting record amounts of fuel during this straight of hormones debacle.

[00:07:37]We're draining reserves instead of building them.

[00:07:42]And you know when you treat the energy system like it can absorb infinite shocks, uh this is what you get.

[00:07:51]Systems break and this one is unfortunately breaking.

[00:07:59]And no matter how many times the administration tells you this is temporary, it's not.

[00:08:06]It's not. There's nothing temporary at all about this.

[00:08:13]And what you'll hear next about this refinery, if you even hear about it anymore, usually we forget about these things a couple of days and then we wake up a couple of months later and find out, oh, it's open again.

[00:08:27]But they'll say things like, you know, the market will adjust and repairs are underway. Don't worry.

[00:08:34]I mean, technically they may be a little bit right eventually, but eventually doesn't help you next week when your gas prices spike, especially if you live in the south, particularly the southeast and the Gulf Coast.

[00:08:53]certainly doesn't help the trucking company whose margins are already evaporating.

[00:09:01]But look, and here's the thing, you know, I say I have this intuition or experience. I tend to say these things and they happen.

[00:09:13]It's more likely, you know, and this might make you a little bit angry, but this is somewhat predictable for for people that have been around this as long as I have.

[00:09:24]Not the explosion itself, but just that accidents happen and it's a pretty fragile system. There's a lot of fragility in the system. There's a lack of of redundancy. There's a lack of a buffer.

[00:09:39]And this decision, which really wasn't one decision, but this willingness to greatly increase our exports of fuel during this crisis instead of saving it.

[00:09:57]You know, that this choice to prioritize corporate profits over consumer protection or consumer resilience, if you will.

[00:10:09]that that's always a thing, you know. Uh we know that the straits are closed. We know that markets are tight.

[00:10:20]And the people that should know know that if we have these kind of disruptions that it's it can be a serious problem.

[00:10:34]We know this this this is this is somewhat predictable. We we're selling our gas to the highest bidder overseas while we're experiencing refining failures in the United States due to the stress we're putting on our refineries.

[00:10:55]There's there's consequences for everything and this is one of those consequences. And I'm telling you right now, the reason I'm not, I guess, more excited about this is because it was this refinery.

[00:11:10]It's 190,000 barrel a day refinery and not a 500 or 700,000 barrel a day refinery.

[00:11:21]That is significant.

[00:11:24]So, we're we're going to experience consequences from this.

[00:11:31]And while we can be thankful that this wasn't a larger refinery, we can also be somewhat frightened that the risk of a large failure at a large refinery is extremely high right now.

[00:11:48]relatively speaking, historically speaking, because we're pushing our refineries to the max and that is when these things happen the most.

[00:12:02]There's there's there's a long history of this. We this is something that we know.

[00:12:11]So, if you live in the southeast part of the United States, if you live in the Gulf Coast and probably the what I would call the southern part of the Midwest, I guess, I would be keeping an eye on your gas prices. Don't worry so much about oil prices. Um, gas is is a little bit detached from oil at this point because the market is is so manipulated and we're not going to see gas move with oil like we do historically.

[00:12:44]Keep an eye on it.

[00:12:47]I'm really not sure of the extent of the damage and neither is the market, but once that becomes clear, it'll be reflected in the market. it'll be reflected in the gas prices.

[00:13:01]Obviously, the the higher gas prices go, the worse it is at that refinery or, you know, however you want to look at it.

[00:13:10]And so, yeah, that that's that's where we are. And don't be surprised at all if this happens again and this sort of snowballs from here. It it's it's definitely possible.

[00:13:27]We're running the risk of that. Listen, folks, if you haven't had a chance, check out the American Power podcast available on Apple, on Spotify, anywhere you download podcast. Uh give it a listen.

[00:13:39]The last episode we just dropped is where I mentioned a potential refinery explosion or failure. And here we are.

[00:13:48]Number one podcast, Energy and Geopolitics. Uh, I really appreciate everyone's support as far as that goes.

[00:13:57]Otherwise, let me know your thoughts in the comments section. I really appreciate my followers and subscribers.

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