Crude Oil WTI Jumps to Highest since November, as SPR Gets Refilled, Saudi Arabia & Russia Extend Production Cuts

“Disinflation” honeymoon was nice, thank you, but it’s over.

By Wolf Richter for WOLF STREET.

The price of crude-oil grade WTI rose to $87.12 per barrel this morning, the highest all year, the highest since November 2022. From June, when WTI was $69 a barrel, the price has now jumped by 28%.

The jump today came after Saudi Arabia (from which the US buys little crude oil) said it would extend its July production cuts through December, as widely expected; and after Russia (from which the US, even before the bans, imported only minuscule amounts of crude oil and petroleum products) said that it would extend its output reduction through the end of the year.

And the US has started to refill its Strategic Petroleum Reserve (SPR), which had been drained by half to force down the price of crude oil during the spike. But stocks have now increased for the fourth week in a row. The increases have been tiny, but it’s all working together.

The SPR weighs in both directions.

June 2023 had marked the end of the oil-price plunge from the peaks in March and June 2022. June was also when the SPR stopped being drained.

Fracking has made the US a huge producer of petroleum and petroleum products, to the point that it was decided a few years ago, that the SPR was no longer as critical to the US energy stability, as it had been in the 1980s, when the US was massively dependent on imported crude oil, particularly from OPEC.

So starting in 2017, under the Trump administration, the SPR was being drained in small increments. By March 2020, it had dropped by 8.5% from the levels in the years 2012 through 2016, to 636 million barrels.

Then as oil prices began to spike in 2021, the Biden administration began selling stocks in the SPR. Those sales reached massive weekly quantities in 2022, eventually bringing stocks down by 50% from the 2012-2016 levels, or by 45% from the March 2020 level, to 346.8 million barrels. At the end of June, it halted the drawdown.

In August, it began adding to the SPR but in tiny increments. Over those four weeks, it added 2.8 million barrels, one-tenth of the four-week pace during the peak of the drawdown in 2022. The refilling is so small that it is barely visible on the long-term chart. The insert shows those increases:

The US, a huge producer, is a net exporter of crude oil and petroleum products.

The US oil trade is big and complex. The US became a net exporter of crude oil and petroleum products for the first time on an annual basis in 2020, when it exported more than it imported. In 2022, that position solidified.

Refineries, including those in the San Francisco Bay Area, in addition to refining domestic crude oil, import crude oil, refine it, and export gasoline, jet fuel, diesel, and other petroleum products. It’s a huge industry and a huge trade, and the US, having transitioned over the years from being a huge net importer to net exporter, has changed the global equation.

The chart shows imports of crude oil and petroleum products (purple) and exports of crude oil and petroleum products (red). It also shows the portion of imports that come from Russia (green) and Saudi Arabia (yellow):

The US being a huge producer of crude oil and petroleum products, and a net exporter, has a vast oil and gas industry, and manufacturing and tech sectors to support it. So part of the country and part of the economy benefit from higher oil prices, including people who work in the sector and in supporting sectors. Investors in that sector love higher oil prices that turn frackers profitable.

But higher oil prices drive up gasoline prices and transportation costs and other costs, and therefore indirectly drive up consumer price inflation, and consumers don’t like that at all, but seem to have gotten used to it. The “disinflation” honeymoon was nice, thank you, but it’s over.

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  113 comments for “Crude Oil WTI Jumps to Highest since November, as SPR Gets Refilled, Saudi Arabia & Russia Extend Production Cuts

  1. SoCalBeachDude says:

    MW: U.S. dollar steams to nearly 6-month high as stocks fade on twin fears

  2. SoCalBeachDude says:

    DM: Pain at the pump as gas prices hit the HIGHEST seasonal level in a decade: Average price stands at $3.811 a gallon

    As of September 5, the national average for a gallon of gasoline stands at $3.811, data from the AAA shows – topping fuel costs from this time last year by a full three cents.

  3. Indelible says:

    Nice report – clear, concise and relevant.

    • Juliab says:

      I expect another .25 points from the FED in September

    • SPR says:

      Not really as the reason Biden massively drained the S PR had nothing to do with national security or US oil production numbers, but 100% politics ahead of the midterm elections.

  4. 2banana says:

    And the good historical news on OPEC “cuts”

    They always wind up cheating and selling way more than their country’s quota.

  5. Abs says:

    Frankly, I don’t understand end game of Saudi’s and manufacturers of ICE vehicles. By limiting supply, both are raising the price of their products .
    and making it very costly to own and run ICE cars. They are accelerating adoption of EV.

    • Wolf Richter says:

      We just spent some days in the Tahoe area for some hiking (Desolation Wilderness).

      Gas station from hell, Tahoe City, as seen on Sep 3. Shell station behind it had the same price. EVs everywhere, and regular at $6.09 a gallon: Those go two hand-in-hand.

      • EVmadness says:

        Yeah, all those rich people spending up big on EV’s to save a few bucks on gasoline.

        Must be nice to be able to collect those tax credits and screw the underclass at the same time.

        • Wolf Richter says:

          You need to update your knowledge. EVs are now less costly than equivalent ICE vehicles. The average transaction price for ICE vehicles is $46k. You can buy EVs below $30k — nice ones too. And below $40k, there are lots of near-luxury EVs with performance that will blow away equivalently priced ICE vehicles. In addition, operating costs (fuel & maintenance) are lower. This nonsense that EVs are more expensive than ICE vehicles needs to stop.

        • Gaston says:

          There are only 3 EV’s under $30k pre tax credit. I think it’s disingenuous to state that price and call them “cheap” not taking that into account.

          Two of them are not considered “nice” if they weren’t EV’s. They are the bolt and bolt euv , which is an econo-hatch. The other is the Leaf and its range and charging is not great. The bolt is discontinued after this year.

          There are more options under $40k but they aren’t “luxury” cars. Great cars, yes, but not luxury.

        • Wolf Richter says:


          “Two of them are not considered “nice” if they weren’t EV’s. They are the bolt and bolt euv ,”

          That’s your taste. I see them all the time, they well-equipped, good-looking, they easily outrun even sporty ICE vehicles in their class, they’ve got all the electronics you can imagine, they’re smooth and quiet.

          “There are more options under $40k but they aren’t “luxury” cars.”

          I said “near-luxury.” That’s the official category of the Model 3 (the BMW 3-series and the Lexus ES are also in this category). Those are the Model 3 competitors. Price a BMW 3-series that performs as well as the Model 3, and that’s your apples-to-apples price comparison. Good luck!

        • NBay says:

          I hear you 100%!…… EVmadness,

          If that goddamn “free market” shit didn’t move so slow, us bottom 50%ers would have our modest (but totally functional) EVs NOW! And our charging stations at home, and a grid that could handle it, And a job that pays a living wage working on/building wind turbines, the grid, and solar panels….and cleaning up the fossil fuel/plastic/chemical mess…..I’d put all the ex-lawyers/CEO types/politicians on that one. Replace most all of them.

          The “Free Market” moves faster the richer one gets is a fact, I think. We need some heavy taxing to speed this up!

        • NBay says:

          EV madness,
          Too bad you are likely a one shot commenter, expecting no agreement at all. From a fellow “earn my living with body AND brains by CHOICE type”…..there are a very few of us here that want nothing AT ALL to do with desks or the creeps behind them, much less aspire to one ourselves. BORING LIFE!

        • NBay says:

          The funniest thing about the guys cleaning up the MESS in the bulky awkward protective suits, would be that they KNOW some person JUST LIKE THEM likely cut costs somewhere, got a promotion or raise for it, and the resulting defect won’t be discovered for 5-15 years, about the time the are thinking about retirement….they will then retire EARLY to the hospitals for many miserable years of drugs and “procedures”.

    • Swamp Creature says:

      My gas station from hell has yet to increase it’s price. Still $4.79/gallon for regular. I’m topping off my tanks on both cars before the price increases.

      • Old Ghost says:

        Jeez. Gas at my favorite Wisconsin gas station over the Labor Day weekend was only $3.33 (stations along the freeway were charging more).

      • NBay says:

        All the ECU stuff works best at 15-85% full. NEVER “top off”

        Just for a few pennies, making it even more ignorant. :)

    • George says:

      On the long run, you are absolutely right. But let’s not forget that overall, the world economy is still heavily dependant on the oil. That’s why on the short run, oil producers have the goal to cripple the economy of green energy countries just enough for the subsidies for green energy to crumble. However, this could take a while. In the end, it will be interesting to see which side is more resilient .
      Any way, if you are trying to ask a favor from oil producers to jump up theirs volume, you don’t start by warning them that your ultimate goal is to dump eventually their product all together… Or if you do, don’t be surprised if they “are helping” you doing so!

  6. WryGuy says:

    Only drained half so only needs to increase 100% to return to normal.

    • phillip jeffreys says:

      It’s been drained by more than half. The SPR infrastructure is also aging.

      Why is anyone surprised?
      – O&G CAPEX has been declining for a decade; exacerbated by ESG priorities
      – no new refineries for how many years?
      – high grade shale reserves have been depleted
      – energy policy is deliberately positioned to raise the cost of petroleum
      – alternative energy costs/consuming technologies are not scaling sufficiently at the margin to lower costs

      It’s a political football with the elites rolling the dice.

      • phillip jeffreys says:

        Note that as the global trading system bifurcates, shipping shortages (very little construction capacity added over the last decade; very little new transport ship capacity added to inventory) are impacted by altered shipping routes.

        Transport as well as exploration/drilling offshore platforms prices have all been on the rise.

  7. Bs ini says:

    I wonder what’s the driving force behind extended Saudi cuts cooperation with Russia? Or maybe supply demand equation does not warrant increases as economies slow ?

    • Wolf Richter says:

      1. Russia is the “+” of OPEC+

      2. The US, Saudi Arabia, and Russia are the top three oil producers in the world, which is why their announcements matter to the market.

      3. The question you SHOULD have asked is: Why are Saudi Arabia and Russia boosting US frackers, LOL

      • jjhawker says:

        The Saudis know the U.S. frackers will be cautious.
        Look at last year when crude went over $100. Frackers remained measured and they will remain measured this time too.
        Their investors also demand divvys and pay down debt, not wild spending for production increases.

        Plus Saudis know frackers don’t trust their own government and they know new rules and regulations can come out of nowhere at any moment

      • Sams says:

        Because US frackers for the time beeing remember the lesson from when Saudi Arabia and Russia dumped the price of crude oil?

        The US frackers now use the high price to boost their revenue and dividends, not their output of oil. No need to increase supply when profit and margins get better with redused supply.

        To Saudi Arabia and Russia it do not matter much if US oil producers earn more money as long as they play along the game of restricting supply.

      • russell1200 says:

        WSJ earlier this year reported that the Frackers at their latest conference pretty much said that fracking production was plateauing in that the easy sources (the good wells) were drained. WSJ had already earlier noted that the Frackers could push up production pretty quickly, but risked depleting the overall amount obtained from a given source.

        The Saudis I am sure have people who pay attention to what is being said at various fracking conferences, and read the WSJ. If they are going to break from the long standing US alliance, it helps to have a healthy (Russia) counterweight, and MSB can play a little bit of a long game to see how long US output can be maintained.

        This doesn’t even factor in the unknown amounts of easy oil that the Saudis have, and possibly a desire on their part not to go through it all too cheeply.

    • Jon W says:

      I doubt there is any real cooperation. WSJ reported a week ago that Saudi Aramco is looking at doing a $50bn share issue before the end of the year, so a move like this (boosting prices) would simply be about improving market conditions before doing that. Russia is probably just happy to tag along with cuts for their own PR reasons.

      What’s more crazy is how blatantly manipulating a market to boost the price you can get for shares you’re just about to issue…works. It shows how completely nuts our equity markets are – you don’t even need to hide ripping people off anymore.

      • Sams says:

        Common interest may result in the same action as cooperation. Even the US oil producers are interested in keeping the price of oil high and may then act to serve the common interest.

        • YacosModernLife says:

          They’re targeting areas with inflation and pumping the narrative to get suckers. Same shady salesman approach of 90’s flea markets now 2020’s plan-demania techno psycho corporate garbage. Like wolfs tourist trap sign above, that is team inflation. Anyone in Denver metro or headed thru to mountains 3.43 regular in Littleton area, 4.09 and up in mountains. Don’t buy anything in boulder, prime is head coach of team inflation. Don’t fall for some fake show. Team deflation let’s go

          Remember kids when consumption drops- inflate, when deflation occurs consume moar! And when all else fails mandate and regulate! Moar consumption pigs to fry then a boomer bbq in July of 81 LMFAO

          95 octane 10 cents a gallon in venezula. Rocky Mountains filled with natural gas, literally gas heads that could each be a station every few miles, we don’t need Saudi or Russian fuel. Shhh Saudi gas stations and .gov elect. charge stations, 3 different ‘station’ but one is local and not available, you can’t make it up. Pipe-nozzle-fuel, genius $6.49 per unit, just like housing board-siding-sheetrock $1 million per unit

  8. jon says:

    Thanks WR for this report.
    So I guess, next week inflation report should print higher because of base effect, health care adjustment and oil price rise.

    • Wolf Richter says:

      The new health insurance adjustment starts with the October data, reported in November. September data, reported in October, will the the last month of the current health insurance adjustment.

      Yes, in terms of the base effect and energy already – they already started pushing up CPI in July’s data, released in early August.

      • RickV says:

        “Yes, in terms of the base effect and energy already – they already started pushing up CPI in July’s data, released in early August.”

        Wolf, I’m having a little trouble with this assertion. Yes, as your well documented article explains there has been an increase in world oil prices in the past couple of days to WTI $85 and Brent $90, but no one knows how long this increase will last. And meanwhile, the August Gasbuddy 1 month US gas price has only increased from $3.76 to $3.80, a not huge increase in August. In addition, the increase in overall August monthly CPI last year was .3 percent and it is very possible this year’s August CPI will be .2 percent (equal to June and July), so subtract last year’s .3 and add this years .2 and you get a -.1 annual decrease in CPI for August coming out 9/13/23. Just sayin’….

  9. William Leake says:

    Gasoline prices are up 15 percent the last month or so. Next overall CPI should be a whopper.

  10. CCCB says:

    Fireworks when this works its way into the CPI… oh wait, they strip out anything that can raise inflation numbers

  11. Hubberts Curve says:

    As the fossil fuel era slowly draws to a close this is the pattern we will see from here on in. Oil will still be available, but it will take higher and higher prices to be make it economic to extract.
    Fracked oil is still available, but it is very expensive to produce compared to conventional oil, and depletes very quickly. So to keep the tight oil flowing we will need to see higher and higher prices. This will keep the producers in business, but it will not make the consumers happy.

    • Michael Droy says:

      Fracked oil is cheap – relative to current prices.
      But there is no way we run out of oil. Saudi has 90 years of reserves. Venezuela has bigger reserves and produces almost nothing. US policy around the world is to sanction and shut down potential producers (Iran, Venezuela, Syria, Russia). While anyone with reserves want them above ground while they can still sell them.
      Oil prices are going to collapse.

      • Wolf Richter says:

        “Oil prices are going to collapse.”

        Yes, sometimes they do. And then they spike again.

      • T says:

        Unless you have some special, insider and secret infot, Saudi doesn’t have 90 years of reserves.

      • Brian says:

        Canada also has massive oil reserves (Athabasca tar sands) though they’re expensive to extract. We won’t run out of oil but the average extraction cost will rise over time.

    • Rohry says:

      Not true, fracking production costs have dropped tremendously in the last 8-10 years. Also, the time from exploration to production is much less than traditional oil rigs.

      • Hubberts Curve says:

        The directional drilling speed, and accuracy aspect of fracking has gotten cheaper, but the rest of it is very material and energy intensive.
        After the hole is drilled ( fun part) it is lined with cement. Then a many mile long tube embedded with little golf ball sized explosives is pushed down the lined hole.
        The explosives blow little holes in the walls of the well casing to allow access to the shale. Then massive pumps are hooked up and pump in thousands (or more) gallons of slurry which is a mix of special sand and a witches brew of proprietary chemicals , in at high pressure. This breaks up the shale and the little grains of sand prop open the cracks.
        All the things needed to do this such as steel, special sand, chemicals, water and energy ( plus the hundreds of truck trips per well) have all gotten much more expensive over the last few years. None of these things are reduced by whiz bang algorithms or Tech.
        Then after all this work and materials are expended the wells deplete very rapidly unlike conventional wells which can produce for 50 years.

    • Pilch says:

      Yet the higher they price oil the quicker they push demand to alternative products (demand destruction).

      This is the end game of big oil.

      • JimL says:

        I am always amazed by the people coming here looking to push an agenda rather than those who are looking to be informed.

        Oil will be with humankind for a very long time.

  12. Joe Frack says:

    Well the Saudis and Russians have tried to punish the frackers. But it ended up like a bad disease where the ones left were stronger, more disciplined and lower cost. At the same time Saudi and the other GCC economies went into tailspins.

    The strategy now seems to be keep oil just under $100/bbl. This prevents the undisciplined frackers from coming in, but ensures their revenue.

  13. Michael Droy says:

    SPR you can buy oil a year forward for something like $10 a barrel cheaper than spot prices, which essentially means that the high prices now are a short term squeeze expected to not last.
    But it also means that the usy running the SPR can buy forward 12 months much cheaper than spot (and have been able to do so for a couple of years now).
    So is the SPR going up now because of new purchases? Or is it going up because purchases of a year or so ago are finally arriving.
    Selling spot and buying forward when there is a big gap makes good economic sense – it softens unpleasant short term squeezes AND makes money.

  14. Nick Kelly says:

    Hasn’t the price of gasoline been lower when oil was higher?

  15. Gary says:

    Oil is trading at historically low levels. The time period of 2012 to 2015 (inflation adjusted) was over $120 a barrel. The oil price is so low that Saudi Arabia was recently reported to be concerned about a budget deficit. Some of the oscillation in low prices was to drive out shale oil production that has a different geology and high production costs, now we seem to be getting back to normal. Looking at the graphs and inflation of the dollar, there is no reason for oil not to permanently trade above $120.

    • toby says:

      As long as Saudi Arabia is building the f.. stupid Line they are not tight on money

  16. I like my Truck says:

    Die Hard American Hoopleheads don’t care about gas prices, got a big ford truck stuck in the mud. This only means we heading to $100 barrel plus before election, maybe new truck prices will come down? Either way I don’t want to hear 1 sob complaining about prices. Consider 5.5% money market or CD’s savings offset for the reality of higher for longer. I’m also tired of hearing complaints about food prices, get off the processed sugar wagon and find the fruit and vegetables isle.

  17. Gen Z says:

    Exxon Mobil has a trick up its sleeve- The Guyana-Suriname Basin. Exxon signed a very lucrative deal with Guyana, and currently plans to boost oil production this year from 400,000 barrels a day to 600,000 barrels a day.

    By 2027, Exxon and Hess estimate that they will be exporting at least a million barrels per day from Guyana alone.

    • Pilch says:

      No one needs oil supply any more than blacksmiths needed more horseshoes when Ford was building his plant down the street.

      • Gen Z says:

        Moderate oil prices is what gets American politicians elected in my opinion. Not too high to affect consumers, and not too low to affect oil producing states like Texas, the Dakotas, etc.

        Exxon is increasing in Latin America, while OPEC+ wants to drive oil prices to the stratosphere.

      • Ctcarver says:


        The US Dept of Energy releases a Sankey Diagram every year that illustrates the source and use of all of the energy used in the US. Google it, you’ll find it.

        In 2021 the US produced just about 100 quadrillion BTUs of energy. Of that just shy of 27 quads went to all forms of transportation. Of that 27 quadrillion BTUs 0.02 quads were transportation powered by electricity.

        Given that the electric grid in the US is at generously described as rickety, it will be some years and trillions in investments before we can assume that around 25% of the total US energy demand can be transferred to the electric grid without serious headaches.

        Think of power being shut off during red flag events. It would make the oil embargo look like a boy scout jamboree, or perhaps like the Burning Man festival with 0.5″ of rain.

        • Wolf Richter says:

          “it will be some years and trillions in investments before we can assume that around 25% of the total US energy demand can be transferred to the electric grid without serious headaches.”

          To still see such ignorant BS after all these years is painful. There is huge idle capacity in the grid at night. This is when electricity is cheapest too, if you’re on time-of-use pricing. And this is when most people plug in their EVs at home, at their condo and apartment garages, and I now see EV chargers in hotel parking lots. To take advantage of the idle capacity in the grid at night is a massive trend, and utilities love it, and only anti-EV morons haven’t figured it out yet. You can see this in San Francisco, where the electrical grid isn’t all that great either, but EV penetration is already huge, with zero problems for the grid. EV are everywhere here.

          For 10 years, people have regurgitated the same idiotic copy-and-paste crap about why EVs will never work, and now EVs are all over the place, and they’re working just fine, and what causes the grid to collapse is a cold wave in Texas, or a heatwave, or a hurricane, but not EVs. Get a grip!

        • Ctcarver says:

          Wolf, I reject your claim of brain dead BS. I never said near universal adoption of EVs is impossible. I said it would take a lot of time and be expensive. It would require at least 50% more power being pushed through our power distribution system.

          Since 2020 wildfires sparked by aging power infrastructure have caused billions in damages, and resulted in a few hundred deaths. That liability and replacement cost will be large and slow moving. The idea that somehow we can greatly increase the utilization of the existing infrastructure without improving it is BS.

        • Wolf Richter says:

          Like all companies, electric utilities need revenue growth; then they can issue bonds to build infrastructure and service the bonds from new revenues from their new infrastructure. That’s how the utilities model has always worked. But electricity consumption in the US was stagnant for 15 years, and it was hard for utilities to do anything. Now consumption is finally coming up, thanks to EVs. EVs are the best thing that ever happened to utilities, and ultimately to the grid because now it’s worth investing in it. You people need to get real. I’m so tired of all this BS about the gird and EVs, for 10 years, copy and paste the same crap. And I just have to waste my time shooting this crap down:

          Amount of electricity generated and sold in the US. See the impact of EVs finally?

      • Nick Kelly says:

        Horses worked alongside the Model T in the US for over 20 years. If you are referring to ICV being made obsolete by EV, it will be longer. Don’t know about US, but in Canada at least 250 K people are in communities nowhere near the grid, then there are numerous remote camps prospecting, mining etc.

        It is possible to be an EV enthusiast while realizing that the energy density of a battery is not comparable to that achievable from the same weight of gasoline. When the gasoline tanker truck pulls into a service station to supply a small rural community for a month, it is carrying the weight of a very few EV batteries. You could say that the IC vehicle ‘cheats’ because the gasoline used is, by volume, only a fourteenth of the reaction, the other 13 parts being ‘stolen’ from the ambient air. Both technologies for energy storage are going to be in use for the foreseeable future.

    • phillip jeffreys says:

      Offshore O&G exploration has been expanding globally (finally). It will nevertheless take years for this to realize new reserves, refining capacity, adequate shipping, etc., etc.

      The data will flow in just like official unemployment data. You know, large revisions every month following initial publication. It is happening – quietly since its contra-narrative.

  18. needleandfecesmoron says:

    TIPS, COWZ and VDE for the win.

  19. David says:

    Maybe the Saudi’s cuts aren’t so “voluntary” and are a cover for declining onshore production. The Saudis are undertaking a major offshore drilling initiative. Why undertake expensive offshore drilling when they historically have very low onshore production costs? Diversification? They are diversifying into sports, tech and mining.

  20. Einhal says:


    “Jim Cramer laments rising interest rates, says market won’t advance if they keep climbing”

    Why must the market “keep climbing?”

    Why are these degenerate clowns given the credence they are?

    • The Struggler says:

      The market is “American Prosperity!”

      We don’t have a good average income or any guaranteed pension, benefits, healthcare or education…

      We have inflated assets and confidence!

      I saw an article about population decline saying “it’s only bad for economies that require constant growth,” concluding that declining population will be good for the world… after we get used to economic contraction.

      • BobbleheadLincoln says:

        Contracting economies work only if you can extend the official retirement age. As it stands, we cannot support retiring boomers without immigration.

        • Wolf Richter says:


          This is hilarious. On one hand, younger people blame boomers for hogging all that wealth and getting super-rich, and on the other hand they blame boomers for not having any money so that younger people have to take care of them after they retire.

          Once you figure out which it is, come back and let us know.

    • JimL says:

      Who gives credence to Jim Cramer?

  21. John Apostolatos says:

    I believe the inflation mentality will return once again when regular gas prices rise above $5 per gallon nationally. Cramer and Wall Street will not be able to spin this. What will the Pivot Crowd do?

    Saudi Arabia needs Brent prices to stay above $81 to balance its budget, and the country has been running deficits because of it. They joined the BRICS since there were afraid of US financial sanctions and other bullying, and now they can sell oil to China and other large BRICS economies without the fear of US dollar sanctions.

    We are our own worst enemy, and great empires always collapse from within.

    • Pilch says:

      Wont ever happen.

      People will refuse to accept $5 gas. They will switch to electric en masse.

      Ever heard the term “capital destruction?” You are watching in in real time bro

      • John Apostolatos says:

        Some people will, like those who have accepted 7% mortgages as the new normal and paid too much for a house.

        • JimL says:

          If you think 7% is an exceptional mortgage rate then you have no historical perspective.

          7% mortgages are very normal.

      • The Struggler says:

        The market is “American Prosperity!”

        We don’t have a good average income or any guaranteed pension, benefits, healthcare or education…

        We have inflated assets and confidence!

        I saw an article about population decline saying “it’s only bad for economies that require constant growth,” concluding that declining population will be good for the world… after we get used to economic contraction.

      • William Leake says:

        We already have five dollar gas in California. The cheap station down the road has it for $5.19. The Shell station $5.50.

      • Swamp Creature says:

        I believe people will start investing in underground gasoline storage tanks on their property if gas gets to $10/gallon. I wonder if there are any companies that build these. That could be a growth industry. If I remember correctly, this industry had it’s birth during the Carter years when people we waiting in gas lines.

        • Wolf Richter says:

          Nah, they’ll buy an EV.

          And an underground gasoline tank is a big liability. If it ever develops a leak, or if gasoline gets spilled when the tank gets filled, or when you fill up your car, you may have trouble selling the property, even at a huge discount, due to the large soil remediation costs.

        • Gilbert says:

          EVs are good if you live in a city where winter is not extreme, but out here in the willy wags EV talk is pie in the sky leftie dreams.

        • Wolf Richter says:

          LOL. EVs are hugely popular in the ski areas at 7,000+ feet in the Sierra Nevada where it gets brutally cold, they’re hugely popular in Norway, they popular in all the northern cities of the US. Get a grip, dude.

      • Ed C says:

        “People will refuse to accept $5 gas. They will switch to electric en masse.”
        Fat chance. I am 73 years old with a 6 year old RAV4 that will likely survive longer than I will. My gas in Phoenix metro area is pushing $5 right now. I drive 6000 miles a year. No way would I switch to an EV. Not living in Kalifornia, they can’t make me.

        • Wolf Richter says:

          Gas stations: We ❤ Love Ed C

        • Nunya says:

          Ed C, it all comes down to cost per mile. In your situation, to replace your current vehicle with the comparable EV, your cost per mile will be higher.

          We will be buying a car in 1-2 months. As I do every time we are up for buying a car, I run the analysis for $/mile between gas, hybrid, EV. The last time I ran it was 2018. At that time, the cheapest (per mile) 4 door mid-size sedan that could comfortably fit 3 kids in the back turned out to be a hybrid. This assumed a 10 year owning period, without taking into account resale value. 10 years is a too long of a timeframe for me to predict resale values.

          One of those kids is now driving a hand-me down car, so we only need to fit 2 kids in the back. But wife would like to sit higher up, so narrowing down search to compact or mid-size SUVs. Cost per mile will rule, along with some “woman logic” thrown in for good measure.

  22. Pilch says:

    Oil is still nothing. Look at the x axis. It goes back to Covid.

    What is news is the oil spread – the gap between oil price and gas price – which is also measured in BigOils profit margin.

    OPEC is all bark and no bite bc they never do what they say.

    Meanwhile why is gas still priced as if oil is over $100? Bc it is not capitalist and we are sheep.

    • Gattopardo says:

      Because inflation = higher refining costs? Because state taxes?

      Gas is super cheap. If it tracked CPI over the last 30 years or so I’m sure it would be well over $10.

      As for your EV comments, meh, you’re forgetting the cost of electricity is also rising. Up to 81c per kw in Cali. Oh, sure, household solar. That helps, but it’s not enough to make EVs king over ICE. At least not for a long time.

      • Stanny1 says:

        I charge my EV with Solar. I have a Solar system that works when the grid power is down. 99.9% of solar systems, even with batteries, are useless silicon when the grid goes down. I’ll be driving when 99.9% of the cars, even EVs, will be boat anchors. I’ll be King then.

        • Too much BS here says:


          Most new inverters that come with a battery charging system are able to continue to use the solar panel system when the grid goes down.

    • Ed C says:

      OK, instead of complaining about the cost of gas why not be a capitalist yourself and invest in XOM or XLE? You can own a share of the evil price gougers.

    • Gaston says:

      Gasoline is sold on an open market and is driven by local supply & demand. It’s not a conspiracy.

      Covid resulted in a lot of supply reduction. Refineries closed. There is still a lot of demand for gasoline.

    • Ryan Merritt says:

      The oil refiners have captured the regulators and are squeezing that for all its worth. That’s how gas, oil and the crack spread between diesel and gas is what it is in the USA.

      And Pilch, perhaps you should skip the middle man brown nosing comments about EVs and just offer to be Wolf’s chauffer pro bono.

      Use a different one of your EVs for every day you drive Wolf around.

  23. Phoenix_Ikki says:

    I still remember those good old days when oil contract price went below zero and Wolf even covered it here….How far we have gone since then..

  24. Mike R. says:

    The remaining big oil producers (not the US) have decided they are not going to give away their remaining oil, like in years past. You are seeing this verified by OPEC+ production cuts as demand falls.

    There still is lots of oil underground in the world, the problem though is it will be more and more expensive to obtain. This has huge implications for any economy and society that has been built on cheap oil. Lots and lots of BS jobs are going to go by the wayside. This will result in huge demand destructioin and deflationary forces which the federak government will try and counter with inflationary efforts. Get ready to ride the roller coaster. And if the dollar ends up tanking world wide, get ready for anarchy in the US.

    If you think people are going to flock to EV’s as gasoline goes up, think again. People will drive less and demand smaller cars before they move over. EVs have their place, but not as currently set up. We need very small EVs with carport solar charging stations for local travel only. People will look back at Tesla and shake their heads.

    US fracking will be spent in another 10 years. Yes, still oil and NG, but very expensive to obtain.

    Do your homework. It is not a pretty picture in the next 2 decades.

  25. Swamp Creature says:

    I’m actually looking forward to the price of gas going up. There is too much traffic and congestion on the streets in DC and neighboring suburbs. Since the pandemic ended it has been hell on earth driving around here. The only thing that will bring people to start using public transportation like they used to will be a dramatic price hike. Bring it on!

  26. Shiloh1 says:

    Plenty of gasoline to be had < $3.90 / gallon, including at Shell and BP stations, in Lake County Indiana, near the Illinois border. Stock up on smokes and booze, too. Tell ‘em JB sent ya!

    • Stanny1 says:

      Some Standard/Chevron stations here in San Diego are $6.09 for regular. I drive an EV on solar. I can’t understand how these ICE owners are happily paying a hundred bucks to fill their tanks. Where are the protests?

      • n0b0dy says:



        hahaha.. haha. you DO realize what country it is you live in, right??

        this isnt france.. where the general population as a whole seems to actually have a pair when it comes to getting the shaft from their gov’t.

        people in this country cannot be bothered with such activity.. there are football games to watch, after all.

        and what makes you think they are ‘happily’ paying?? i doubt anybody is ‘happy’ about it.. but the distance between being ‘dissatisfied/unhappy’ and actually protesting, is VAST..

  27. Realist says:

    According to Reuters, Russia is suffering from production shortfalls and refinery problems due to equipment and spareparts shortages plus failing logistics, causing fuel shortages, especially diesel. No diesel, no running combines, no harvest

  28. The Real Tony says:

    Biden tried to artificially bring down the inflation rate and now he has to replenish the oilfields at a higher price. This is justice prevailing.

  29. larry callahan says:

    I know you corrected it in the body of the article but the part of the headline about SPR gets refilled was borderline gallows humor. The injections seem token and contrived at best.

    • Wolf Richter says:

      That’s what they said in reverse when Biden announced that they would start draining the SPR. Zero Hedge and its blogosphere were joking about it massively, laughing about how ineffectual and small those releases were, especially since oil prices continued to rise during the early phases.

      When you start doing something, that’s how it is. It’s small, but if you do it every day, it adds up. And then it has an effect.

      • phillip jeffreys says:

        Wolf…your addendum is correct…though I recall that the gist of the ZH articles at the time was that the releases would impact prices (at the pump) in the short-run only, that absent new production this was a self-defeating strategy if reserves renewals were not a priority (especially at lower prices) and that, at the end of the day, the SPR was not intended to manage cost at the pump but, by definition, intended for “strategic” purposes.

  30. Sergi Tolstoy says:

    Was it not the US intention:
    ”First, the Department of Energy (DOE) is issuing a Notice of Sale tomorrow morning for 15 million barrels from the Strategic Petroleum Reserve (SPR) to be delivered in December. This sale will complete the historic, 180-million-barrel drawdown the President announced in the spring, which has helped to stabilize crude oil markets and reduce prices at the pump. ”


    ”Second, the President is announcing that the Administration intends to repurchase crude oil for the SPR when prices are at or below about $67-$72 per barrel, adding to global demand when prices are around that range. As part of its commitment to ensure replenishment of the SPR, the DOE is finalizing a rule that will allow it to enter fixed price contracts through a competitive bid process for product delivered at a future date. This repurchase approach will protect taxpayers and help create certainty around future demand for crude oil. ”

    Can someone explain the Energy Dept current reasoning!

    • Wolf Richter says:

      Not sure why you’re posting this. What you cite was announced on Oct 18, 2022.

      The intention was to bring the price of oil down from the triple-digits to $70 a barrel, and then buy back at the lower price — sell high, buy low, make the taxpayer some money, and save the consumer some money, at the expense of the oil-and-gas overlords, no?

      When you sit on a huge stockpile, you can do that — sell high, buy back low.

      In terms of bringing the price down while they were doing it, it worked for a while. Obviously, it’s not going to work forever.

  31. Bruce Livingstone says:

    I don’t claim to be an expert on fracking (it is utilized in my country, NZ) but have over the years talked to people in the industry, chemical suppliers and such. The view that I have formed is that fracking is viable so long as the cost of water is not priced in, At the moment there is no way of removing the chemicals from the waste water. Eventually Governments and or responsible States will have to address the issue, recognizing that potable water is essential to life, whereas, as discussed in this forum, the demand for gas to power vehicles will ultimately decline.

    • Wolf Richter says:

      Standard sewage treatment plants are ill equipped to deal with the contamination in frack water. But there are ways to filter and treat it. But it’s expensive, as you point out.

      Reusing frack water blended with fresh water on the next frack job seems to be the cheapest solution.

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