Oil price dropping, but refilling reserves will slow that. Shipping costs dropping lowering prices






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No doubt increasing concerns over a recession has the knee jerk expectation that fuel usage will decline, but given the very low loss of jobs outside the tech sector, is this necessarily true? How many of the tech job losses were WFH, with the possibility that they may now need to find a job they have to commute to? For those with jobs, or savings from their previous high paying job, I don’t see a decline in travel, though that travel may be by auto rather than plane. In this stage of Covid, with increased treatment and preventative options, no one wants to go back to the isolation of staying at home. More travel by car, a shortage of diesel and heating oil, results in refiners for the most part being able to rebalance processing of the crude to compensate for decreased jet fuel demand. I can’t address the possible impacts of decreased shipping if people buy less with dollars that don’t go as far. That may be where the larger impact lies.

Or this may all be wishful thinking on my part, as we are looking to sell some refining stock options, and hoping we didn’t miss the bus. Even if crude supply is no longer constrained, refining capacity is. Hopes of restarting the St. Croix refinery, a place that was problematic in the best of times, are dimming even further: Refinery on St. Croix, U.S. Virgin Islands | US EPA. A mothballed refinery is a tough restart at best, potentially impossible if they are not given a break on the Clean Air Act. Local Territorial politics don’t help, though maybe they will be tempted to behave to get the good jobs back on island. But experienced workers needed to run the plant are thin at best, and very expensive to relocate to the island. I don’t see it happening. Given the constraints on refining and a possible full employment recession, perhaps this time will be different for refining stocks in a recession. Or as I said, perhaps that’s wishful thinking.



IP the thoughts of recession in the US are one thing that may not matter too much right now.

The smaller countries around the world are often in a recession now. Their usage has dropped as has China’s.