Locator: 51727DIESEL.
Locator: 51727PERMIANGAS.
RBN Energy: with US refiners already running hard, relief on diesel remains elusive. Link here. Archived. See also this link -- the chokepoint is not storage facilities (they are empty in many cases) but rather the pipelines, trucks, and rail. The latter (pipelines, trucks, rail) are maxed out and can't handle much more diesel in the areas where they need it most.
A $100/bbl diesel crack spread is an incredibly strong market signal, but it doesn’t translate to higher refinery output because most U.S. refiners already operate at or near their practical limits. As global supply disruptions drain inventories and foreign buyers pull more barrels from the U.S., diesel prices have surged even as domestic refinery runs remain near historic highs. In today’s RBN blog, we look at why high crack spreads don’t necessarily increase a refinery’s output, how market disruptions elsewhere can drain U.S. inventories, and the indicators that will help tell us whether the diesel squeeze is easing (or worsening).
As we noted in Part 1 of this mini-series, 2026 will be remembered by some as the year that diesel cracks topped the century mark ($100/bbl) for the first time. On August 17, the U.S. Gulf Coast diesel crack spread (vs. WTI Cushing) surpassed that sky-high level. On Monday, September 1, 2026, the diesel crack closed at $103.29/bbl, the highest close on record, before reaching a record high intraday price the following day of $108.02/bbl. As of publication, the diesel crack soared even higher, closing at a new record high of $107.72/bbl on September 10. It’s important to note that global crude markets are not terribly short of crude in the traditional sense (despite various geopolitically driven constraints). Instead, the world is struggling to refine enough crude oil into middle distillates to satisfy demand. U.S. distillate stocks in August were on track for their lowest end-of-month level since April 2005 and were the lowest for the month since 1951.
A crack spread measures the difference between the value of refined products and the crude oil used to produce them. A $100/bbl headline diesel crack (the right end of the orange line, measured against the left axis in Figure 1 below) does not mean a refinery earns $100/bbl in net profit.
First and foremost, U.S. refiners and importers currently incur approximately $15 in RVO/RIN compliance costs for every barrel of diesel sold domestically. That cost is passed through 100% into the domestic diesel price. The headline crack therefore includes the full RVO/RIN cost—an amount the refinery must spend on compliance rather than retain as margin. To calculate the effective crack spread, the entire RVO/RIN cost per barrel of diesel must be deducted:
Effective diesel crack = Headline diesel crack − RVO/RIN cost per barrel of diesel.
Thus, a $100/bbl headline crack less than a $15/bbl RVO/RIN cost yields an $85/bbl effective crack (still a historical high value), before operating costs and other expenses. The same distinction explains why, on a comparable basis, U.S. diesel exports to Latin America typically sell at a discount to domestic diesel equal to the RVO/RIN cost: exported barrels do not carry that domestic compliance obligation.
In addition, refiners still have operating expenses, transportation costs, financing costs, hedging effects and the economics of the other products produced by the refinery. Instead, it means that the market value of diesel relative to crude has become extraordinarily high. If crude (blue line and left axis) is expensive because the world is short of barrels, crude prices should be doing most of the work. But when diesel prices (green dashed line and right axis) rise dramatically relative to crude, the problem is further downstream.
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RBN Energy: Summit's Double E expansion. Link here. Archived.
Summit Midstream is moving full speed ahead with the 900-MMcf/d expansion of the Double E Pipeline after it secured about 550 MMcf/d of long-term commitments to move natural gas from the Permian’s Delaware Basin toward the Waha Hub. The company reached a final investment decision (FID) on the project, designed to address growing Permian natural-gas production and rising demand from Gulf Coast LNG export facilities, after a successful open season. In today’s RBN blog, we’ll discuss what the expansion means for Permian producers and regional gas flows.
When it comes to the Permian, there’s a lot to discuss as it pertains to natural gas. Production in the basin has risen substantially over the years and should continue to grow, supported by crude prices, while pipeline capacity constraints have kept spot gas prices low. That higher production is partly because the region’s gas-to-oil ratio (GOR) has steadily moved higher. As we noted in Hold On … I’m Comin’, the Permian’s GOR has increased from about 3.4:1 to 4.2:1 over the past 10 years, a trend that appears likely to continue. In addition, the LNG terminals along the Gulf Coast have become the fastest-growing outlet for Lower 48 natural gas, with export capacity now about 18.3 Bcf/d and on track to approach 30 Bcf/d by 2030, much of it supplied from the Permian Basin.
The Double E expansion is intended to address those issues. The pipeline, which was constructed in 2021 and runs from the Eddy-Lea county line in New Mexico to delivery points in and around the Waha Hub in Pecos County, TX, has been an important route for moving Permian gas since its startup. The 135-mile system is 70% owned by Summit Midstream and 30% by an ExxonMobil subsidiary, with Summit Midstream Permian II LLC serving as operator. It runs near ~30 processing plants with a combined capacity of roughly 10 Bcf/day.
