Pump prices near $1 above last year into Labor Day as drones knock out a Russian gasoline unit
Houston drivers paid close to a dollar more per gallon this Labor Day weekend than they did a year ago, and they were not alone. The national average sat around $4.15 ahead of the holiday, some Sacramento stations topped $6, and diesel is running near record highs. For jobbers and haulers that means fatter invoices on every load and thinner room to pass it all through to c-store customers who are already flinching at the sign.
The pain is broad. Washington drivers are high and staying there, per the White House's own read. Markets from Killeen to Nashville reported the same uptick going into the weekend. Higher diesel is the one that bites operators directly, since it sets the cost of moving every gallon you sell.
Ryazan hit again
Ukrainian drones struck Russia's Ryazan refinery overnight into September 6 and started a fire, the latest in a run of hits on that plant. Footage analyzed by open-source monitors points to the Izomalk-2 isomerization unit, which turns low-octane pentane-hexane fractions into the high-octane components that go into gasoline. Reports say two of the plant's four crude units were already down and the blending unit was taken this time.
Ryazan is one of Russia's largest refineries, roughly 17 million tons a year and about 5% of national refining capacity, and it had already halted processing after strikes in May and July. Rostov took drone activity the same morning.
Why a US operator should care: every barrel of Russian gasoline and diesel that does not get made has to come from somewhere, and that tightens the global product market you buy into. Refining margins are already rich. CRAK, the refiner ETF, is trading around record margins at about 9x earnings, which tells you crack spreads are wide right now.
Hormuz in play
The war involving Iran is pushing oil exporters and importers to rewire their trade routes, and OilPrice reports the change may prove hard to undo. The Strait of Hormuz moved close to 20 million barrels a day of crude and LNG before the first US and Israeli strikes. Anything that threatens that chokepoint puts a risk premium into crude, and crude is what sets your rack price. Senator Bernie Sanders tied the war directly to pump prices and called for it to end.
Cooking oil theft
Buffalo Biodiesel is warning restaurants that theft of used cooking oil is climbing. That feedstock feeds the biodiesel pool, and thieves grabbing it off the back of a diner is a small sign of how tight and how valuable the renewable feedstock market has gotten. Down in Brazil, JBS ran a heavy truck 500,000 kilometers on B100 made partly from beef tallow and used cooking oil between Lins and the Port of Santos, which shows the same feedstock pull from the demand side.
What to watch
Whether the Ryazan damage keeps units offline long enough to move product prices, or whether Russia patches it fast like past strikes. Watch crack spreads and diesel first. If Hormuz stays open and OPEC holds output, crude could ease and take some pressure off the rack. If the strikes on Russian plants keep landing, product could stay tight into fall.