Key Points:
The Number Behind the Pain: US gasoline stockpiles sit at their lowest July level since 2012 while fuel exports run at record highs and the gasoline crack spread has reached $59 per barrel, the strongest reading since June 2022.
What Happens Next: If crude falls back toward $70 on a Hormuz reopening, retail gasoline should still hold near $4 and diesel above $5 well into August, because refiners have already committed the July product run to overseas buyers under signed contracts.
The Confirming Move: Retail gasoline prices have climbed 32% since the outbreak of the Gulf conflict, roughly double the 16% move in crude, indicating refiner positioning and export flows are driving the pump more than feedstock costs.
There's a refinery in Baytown, Texas. It runs hot day and night. But the gasoline it made this month isn't going to your pump. It's on a ship to Rotterdam.
I can't stop thinking about this. You paid four dollars a gallon last week. Diesel was over five. And you probably blamed Iran. I get it. The news says war. The news says Hormuz. The news says oil.
But that's not the real story.
Back in June, before the missiles started flying in the Gulf, refiners in Texas and Louisiana looked at their books. They saw something. Buyers in Europe were paying more for diesel and jet fuel than buyers here at home were paying for gas. So they changed the mix. They ran less gasoline. They ran more diesel. They ran more jet fuel. And they put it on ships.
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That was a choice. Made in a boardroom in Houston. Not on a battlefield in Iran.
Now our gas stockpiles are the lowest they've been for any July since 2012. Not because a bomb hit a tanker. Because we sold it. Fuel exports are at record levels. The profit a refiner makes on each barrel of gasoline is called the crack spread. It just hit fifty-nine dollars. That is the highest number since June of 2022.
Here's what worries me. Gas prices are up 32% since the war started. Crude oil is only up 16%. That's double. If this was really about Iran, both would move together. They aren't. The gap is the choice. The gap is Baytown picking Europe over Ohio.
And here's the kicker. You can't flip a refinery back on a dial. The July run is already sold. Contracts are signed. Ships are loaded. Even if Trump reopens the Strait tomorrow and oil falls to seventy dollars, the gas at your pump stays near four bucks. Diesel stays above five. Well into August. Maybe longer than that.
I don't think most people realize what this means. Every truck on I-70 is burning five-dollar diesel right now. Every load of lettuce from California. Every pallet of drywall from Georgia. Every crate of ibuprofen from a warehouse in Ohio. That five-dollar diesel rides on every single mile. And it gets baked into the price you pay at Kroger. At Lowe's. At the pharmacy counter on Main Street.
So the war didn't do this to us. Not really. A refinery in Port Arthur got a better offer from a buyer in Rotterdam. That's the whole story. That's why your grocery bill is up. That's why the plumber charged you more for the service call. That's why the vet bill last week made you flinch.
Nobody in Washington is talking about this. They're talking about carriers and drones and sanctions. Fine. Let them. But the money coming out of your wallet has a simpler explanation. Somebody in Texas took a phone call. And the answer was yes to Europe. No to us.
I'll tell you what makes me uneasy. This isn't a one-month problem. Refiners plan their runs weeks out. The August batch is mostly set too. September isn't far behind. So we're looking at a full summer of tight gas, expensive diesel, and grocery bills that climb week after week. And nobody in the news is saying it.
The number I keep coming back to is that fifty-nine dollars. That is what a refiner in Baytown makes on each barrel of gasoline he sells right now. In a normal year that number is fifteen. Maybe twenty on a good day. He is making three times what he made last summer. And he is not going to give that up because the pump in your town says four dollars.
Nobody knows how long this lasts. Could be six weeks. Could be six months. Depends on Europe. Depends on winter demand. Depends on whether some other refinery somewhere comes back online. Anyone who tells you the exact date is guessing.
But here is what I do know. The story you're being told about your gas bill is wrong. The truth is smaller and closer to home. It's a Texas boardroom. It's a shipping manifest. It's a check written in euros.
You're not crazy for feeling something is off. Something is off. It's just not what they're telling you.
More on this tomorrow.
— Lauren
Editor, American Ledger
