Crude Oil Supply Is Recovering. Why Not Diesel? | Skip York & Ronald Stein

Diesel prices are at record high and it's driving inflation a lot higher in the U.S. There were some recent short-term deals made with Russia to provide some relief. But what's really happening in the industry? And will the prices come down long-term? Today we sit down with Skip York, who's an insider in the oil and gas space. He's going to tell us what's happening inside this industry and what is the refining capacity look like across the globe. There's a 12 million barrel a day gap between demand and refining capacity right now. That's a historically wide gap, and that now has people starting to worry that, can we keep the refineries online, and can we keep pushing them as hard as we've been pushing them the last six months? If they open the Strait, you know oil's flowing again, prices are going to go down, time out. Unless you have a refinery, that oil is useless. You've got to refine it into something usable. I'm Siamak. Welcome to Market Insider. Skip, it's great to have you on. Welcome. It's great to be back. We want to talk to you about what's going on in your industry with refining. We're making deals with Russia. We're trying to figure out how to bring the refining capacity back up. How long will this last? Can you tell us what you're seeing out there in your space? Yeah, so what we're seeing is I think we're in a world where, you know, we've got a couple of deals that have been done out there. We've got a G7 release of more barrels being released. We've got the Trump-Putin diesel deal. uh that's just now started to come into act uh that's now just becoming active uh there's pressure for the chinese to increase their uh their product exports especially diesel but let me take a step back and say what have we lost well what we've lost between the interruption in the Strait of Hormuz with refining capacity in the middle east and then the damage to russian refineries uh from the ukrainian drone strikes collectively they've taken about 1.3 million barrels a day of diesel production off the global market now that's about five percent of global diesel demand if you look at the deals that have been done the g7 release the trump putin deal uh convincing the chinese to increase their exports if you look at the numbers you can close about half that gap for about three or four months because these deal all these deals what all these deals have in common is that they're about a three or four month time span on the deals they're not restoring capacity. They're just merely going to bring barrels forward into the winter months. So we might be able to close about half that gap, but we still have a diesel shortage going through the winter and as we move into 2027. The IEA did some analysis, released some analysis last week. What they said in that report was that even if all refineries in the world return back to normal operations by the end of the year, which means that those Russian refineries have to get repaired and the Ukrainians stop attacking them. If you return all the refining operations in the world back to normal operations by the end of this year, you're still looking at a tight diesel market and elevated diesel prices through at least the first half of 2027. Because it's not just the flow that we've lost, we've also been draining down stocks to try to make up for that lost production. And all of that has to be rewound and refilled. And that's going to take a fair amount of time. So within the industry, I think there's not a lot of optimism for a lot of price relief coming to consumers through at least the first half of 2027. And do you guys look at the conflicts globally? And is there potential for more damages to refineries, especially in the Middle East? And how much of that is a concern? And Russia still? So we've now seen sort of like in some sense, a third leg open in this global conflict. We have the conflict in Russia-Ukraine. We've got the conflict around the Strait of Hormuz. And we now have this escalation in kinetic activity of the Houthi rebels in Yemen against Saudi Arabian targets. Now, so far, they've been attacking sort of airports and pipelines. But if they have the capacity to hit airports and pipelines, could they actually start going after the refineries in the region, whether they're Saudi refineries or Kuwaiti refineries that's a wild card that could that could get played the other part of the the Houthi conflict though is the ability for them to restrict flow out of the Red Sea so even if they don't attack the refineries in Saudi Arabia their ability to shut down or reduce the flow of tankers coming out of the Red Sea either south through El Mal mal greb or north through the uh through the Suez Canal if they can restrict that flow that's the equivalent of taking a refinery offline. And that's another wild card. That's another dimension that people are now watching more closely because they are becoming much more aggressive than they really have in about the last 10 or 15 years. How much of the product is flowing through these places that are kind of dangerous? So if you kind of go back to before these conflicts opened up, Strait of Hormuz was transiting about 20 million barrels a day of volume, probably about 15 to 16 million barrels a day of crude oil and about another 5 million barrels a day of product. Now, if you look on the crude oil side, we've largely replaced the vast majority of that 15 million barrels a day. We are back to probably around 10 million barrels a day going through the Strait of Hormuz. And then we've got these pipeline options through the United Arab Emirates and through Saudi Arabia that we're probably back to about 12 to 13 million barrels a day on the crude oil side. So not back to the full 15 million, but pretty close. The product side is the issue. Where we were flowing about 5 million barrels per day, a lot of that was disproportionately diesel that was moving. We're down to maybe 600,000 to 700,000 barrels a day moving through the Strait of Hormuz because those products can't move through pipelines because the pipelines are filled with crude oil. So the only way product can come out of the Middle East is coming through the Strait of Hormuz. And we've seen that traffic drop about 90 percent since March. And it's kind of hovered there. There's a little more product flow in September than there was in the earlier months. But we're still well short of that five million barrels a day that we need in order to rebalance the global market. The crude oil prices are still not coming down. They still haven't shown any relief. What are your thoughts on crude oil? On the crude oil side i think we've gone from uh the high prices that we saw sort of in the spring march april and may i think we saw those prices were based based on scarcity but because we didn't have those alternate routes in place yet and we hadn't ramped them up uh then we went through if you remember we went through june and july where prices dropped dramatically and then they started to escalate again as activity has returned i think we now have what's driving crude prices is really two things One, there is still increased risk of transiting through the Strait of Hormuz. Over the last two weeks, we've had 26 vessels attacked in the straits, which is a new high. When you think about throughout the entire conflict, we've had a little bit over almost 55, 56 vessels attacked. Half of them were attacked in the last two weeks. And so there's this risk profile that has returned, and that's escalating things like insurance and freight rates for the tankers. the other part of this goes back to the product side is that product prices rise and they separate from crude prices and we have what's called the crack spread which is the difference between say diesel prices and crude oil prices those have gone out to about a hundred dollars a barrel so if you're looking at hundred dollar crude you're looking at a hundred dollar diesel crack you're looking at two hundred dollar a barrel uh diesel prices in the world but now those diesel prices are starting to pull crude prices up because if you can get your hands on those Middle East crudes, they tend to produce more diesel than some of the crude oils from other parts of the world. So that's what's now seems to be driving it is we're now driving crude prices by which crudes have the highest diesel yield. Those are the crude prices that are starting to pull up and they pull the rest of the crude complex with them. But this has really now turned from a crude dilemma to a product's price to a product's prices and that's really what's driving both crude and product prices right now on the product side what are the ones that are impacted the most diesel and gasoline and other things like jet fuel can you tell us more about what has been impacted the most so the ones that have been impacted most are the transportation fuels which is really driven by diesel probably the next largest increase is in jet fuel it's not it's not a large market volume wise like diesel or gasoline globally but it is sort of a cousin of diesel fuel so when diesel fuel prices go up jet fuel prices go up as well and then gasoline prices are are being pulled up as well because the refiners see the high diesel and jet fuel prices they try to change their operations to make more diesel and to make more jet fuel but there's only so much there are only so many molecules in the crude oil barrel so when you're pushing your operations to make more diesel jet you're making less gasoline and so the gasoline market is getting tight is tight because we're trying to move molecules out of gasoline and into diesel and we've probably flexed that as hard as we can right now so now we're all three products are probably we're probably maximize the production of those three products the other barrel the products that are out there like petrochemical feedstocks and whatnot they're being impacted just by the crude elevated crude prices but they're really not being impacted by the transportation dynamics of diesel, jet, and gasoline. The other thing I should say is that we're pushing the refinery kit in the world harder than it's ever been pressed before. Utilization rates are at record highs, and that now has people starting to worry that we're pushing the refinery processing units so hard that at some point something in a refinery might break, and we now get unplanned outages, and we actually lose some of the production that we're getting outside of Russia and the Middle at least we're pushing those refineries really hard and there's an increasing risk now that something might happen you know you might break something inside one of those refineries because you just pushed it too hard for too long and that's what has people really kind of watching uh the next few months to get us through the winter is can we keep the refineries on online and can we keep pushing them as hard as we've been pushing them the last six months and it's pretty common for refineries to have outages, right? I think here we have less of them. Can you tell us about that? Yeah, so it's not unusual to have unplanned outages. No refiner wants to have an unplanned outage, but things just go wrong inside these continuous processing units. So it's not unusual to have unplanned outages. Where you do tend to see the risk is when you start asking a specific refiner. When you start asking that refinery to do something it hasn't done historically, that's when you start getting the into the danger zone of increasing the probability of an unplanned outage and that's the key is that we don't see the unplanned outage coming we just know that the probability of the outage is getting higher and then something snaps and all of a sudden we lose the capacity and that's and that's when we start losing production what i will say is what's a bit different from the u.s is a bit different than the rest of the world in this respect u.s refinery utilization is in the upper 90s, 97, 98%. That is a historically high number for the U.S. But the U.S. refinery capacity system tends to run in the 90 percentile range anyway. So we've got a lot of experience with pushing these refineries as hard as they're being pushed. So I'm not so much concerned about an unplanned outage in the U.S. It could happen. But I'm more concerned about unplanned outages showing up in other parts of the world where we're pushing refineries harder than we push them and if i was to look i would be looking specifically at some of the more simple refineries in africa and asia that's probably where the risk is the highest and then probably europe is probably the third is third and then the u.s would be a distant four in terms of refineries how long does it take to build one and why is the capacity so tight so capacity is tight because really kind of two things have happened we've actually lost about 800,000 barrels a day of refining capacity net loss so we've built some refineries since 2019 we've built some refineries but we've also closed refineries we've closed refineries faster than we've built them so globally we've lost 800,000 to a million barrels a day in a market of about 90 million barrels a day refining capacity so it's not a big number but refining capacity is going down at the time that oil demand over that same period of time has grown 7 million barrels per day so we've got 7 million more barrels a day of demand and we haven't added 7 million barrels a day of capacity we've actually taken a million barrels of capacity offline uh or we've closed it now you add on top of that the three to four million barrels a day of capacity that we've lost in russia because they've been damaged by drone strikes or the reduced refining runs in the middle east because they can't get the product through the Strait of Hormuz now you've got sort of a we've grown demand eight million barrels a day but effective capacity is down four million barrels a day there's a 12 million barrel a day gap between demand and refining capacity right now and that's something we've never seen history and that's a historically wide gap. That explains why diesel and gasoline prices are so high. That's why the markets are so tight. Now, how long does it take to replace that? Well, if you're building a brand new refinery, you're looking at probably somewhere in the neighborhood of five to seven years because you have to engineer it, design it, construct it, and then commission it. And all of that takes time to construct, along with if you're in certain jurisdictions, the permitting process can also be fairly extensive now we might get some capacity additions before seven years if you're an existing refinery that has a project a deep bottlenecking project where i can squeeze a little more capacity and a little more production out of my existing refinery we might see some deep bottlenecking projects but even those deep bottlenecking projects can take 18 to 24 months to do because they're they're still complex projects they're in complex uh operating environments and you have to shut down a portion of the refinery in order to do the work and tie it in. And so you have to kind of get all the timing right. It's not just about constructing the capacity. It's also about timing when you can tie that new capacity back into the refinery and make the refinery bigger. And all of that just takes timing to get it right. I think realistically, I don't think we're going to see any material changes in refining capacity globally. I think we're looking at the earliest. It's the end of 27, but more likely it's 2028 and 2029. So do you see the diesel prices and gas prices to stay high for a long time to come? I think what it's going to take to bring diesel and gasoline prices down, we've got to get that Middle East and Russian refining capacity back online and get those products flowing back into the market. So how long does that take? That's not a question the industry can answer. That's a diplomatic slash military solution that needs to be brought into place. But ultimately, that's what has to happen to really get meaningful relief and prices, to get prices to kind of renormalize to back to where they were before these conflicts broke out. We need a resolution to really to both of those conflicts. Resolving one of the conflicts will help, but to really get the market rebalanced, you need both of those conflicts resolved. Right now, how's the profits looking for refiners? Because the prices have gone up, the cost has probably gone up, but not as much as the prices of the diesel and gasoline. How does the financials look like? I think the financials are looking very strong for refiners. If you look at the U.S. refiners, I think when the third quarter earnings come out, I think we may see record earnings among the independent refiners and the refining segments of the integrated oil companies. And you're exactly right. Crude prices might be at $100 a barrel, but that crack spread, the difference between crude prices and product prices is also at a record high level at $100 a barrel. Now, their operating costs are probably a bit higher than they were before the conflict started, but they're not $100 a barrel higher. So I would expect to see very strong earnings, if not record high earnings for the refiners. And I think that rolls into, you know, we're into early October, we're early in the fourth quarter. But I think we're going to see that roll into the fourth quarter as well. And the fourth quarter is normally the weakest quarter for refiners financially. And I don't think we're going to see that this year. I think we're going to see a strong, a very strong third quarter and probably an equally strong fourth quarter. Going back to oil, there was a talk of a glut and a lot of people talked about Venezuela having more capacity coming online across the globe. There is people have been arguing that there is a glut. What are your thoughts on oil? So I think that, you know, if we before the conflict broke out in the Middle East, we were looking for a world where we were going to be oversupplied on the crude basis. where the estimates range from maybe it was going to be a 2 million barrel a day oversupply up to 6 million barrels a day oversupply that upstream capacity is still being built and it's still coming what's offsetting it right now is the fact that we can't get all the crude oil out of the middle east and we can't get crude oil out of russia but if you go back to where we need price relief for consumers and that means resolving these two conflicts when those two conflicts resolve, then I think you're going to see all that capacity that's being built outside of the Middle East and Russia will come on stream. The return of the capacity in the Middle East and Russia comes back, and we head towards a period where it's going to look like we're oversupplied. That doesn't necessarily mean that we'll see lower crude oil prices, because we've drained crude oil stocks so far in 2026 that we need to rebuild those stocks, especially the strategic stocks like the Strategic Petroleum Reserve in the U.S. and similar strategic reserves around the world. So we might actually see a softening of crude oil prices, but not really a collapse of crude oil prices as we rebuild those stocks. Rebuilding those reserves probably takes a year or two. Then you get out into 2028 and 2029, we might see another step down in prices because we will see this fully supplied uh crude oil market but it all goes back to when do we get the the these two conflicts resolved and it's not only when do they get resolved but also how do they get resolved that's what really sets us on the path for lower product prices initially and then probably lower crude oil prices at some point off in the out in the future but i think once again i think we're probably looking at a world of crude oil prices in the rest of this year and early next year, we're probably still in the 90s. Maybe by the end of 2027, we're in the 80s. But the notion that we're going to return, I think, to $60 crude oil prices, I think that's still several years off, if ever. Now, what about the refining capacity? Are we building more refineries? We're building a large one here in the US. And what about the rest of the world? What do you see out there? So we have a couple of projects that look like they're coming. I mean, in terms of what's under construction we've basically completed the last wave of capacity additions and they're being finished up that might be a million barrels a day that comes online this year uh we do have the the large project in the us we also have another project in Nigeria at a place called Dangote, Dangote is already at about 700,000 barrels a day they plan to replicate that refinery right next to it so another 700,000 barrels a day there and then the same Dangote company wants to build an equal another refinery like those two uh in Kenya and then you're really the next place you're really looking is India uh we might get about um there's plans out there it looks like maybe a million 1.2 to 1.5 million barrels a day of new capacity coming in India that gets spread out over a couple of years um but outside of India and Africa we really don't see capacity additions anywhere we've really kind of completed the construction wave in the Middle East and of course it's hard for them to construct new refineries now because of the conflict but even once the conflict is resolved it's not clear that we're going to see refinery new refinery capacity added in the Middle East so new capacity in the future really might be sort of an Africa sort of India uh sort of that might be where we see the biggest increases in capacity what might happen to help us on the capacity side, we might not see the closures that we thought we were going to see in 27 and 28 and 29. As long as refinery margins are as robust as it appears that they are, if they stay that robust, it just changes your decision metrics about when you close a refinery. So we may get a slowdown in the closure rate, and that will also then help keep capacity online and then add capacity as these other projects come forward a number of refineries closed here in California um do you think they could potentially reopen or do you think that they're gone especially the last couple um is there a chance for Valero to bring that one back online and there was another one Phillips 66 but i heard Valero was a much better refinery is there chance of those coming back or well so i think there's always there's always going to be the potential if if you've closed a refinery like the Phillips 66 refinery in Los Angeles and the refinery owned by Valero the best time to restart a closed refinery is right after they close down so the longer a refinery sits idle the harder it is to bring it back online and the more expensive is to bring it back online. So if you're looking at restarting refineries, if the United States is looking at restarting refineries, those would be the first two refineries you would look because they were the last two that were closed. Now, we do see sort of some work, Secretary, Vice President Vance was in Texas last week to talk about using the Defense Production Act to accelerate an expansion project at a little refinery in Tyler, Texas owned by Delek. You could see similar things where you get sort of the Defense Production Act could be used as ways to kind to facilitate restarting some refineries, whether it's those refineries in California or refineries someplace else. What the act does is it really would just improve the restart economics and make it so that the company can justify restarting the refinery. That's really what the Defense Production Act does. We haven't seen anything else. Tyler, Texas was the first announcement, but the vice president did say that there were other announcements coming. So maybe one of those refineries is, look, maybe those, one of those refineries is in discussions about restarting and working with the federal government. But we'll have to wait and see the announcement. You know, first of all, is there an announcement? And if there is an announcement, how long does it take them to restart? So Skip, refineries haven't been the most interesting or most profitable segment from the oil and gas operations. Now things are looking different, right? I think they're looking different if you're sitting in the U.S. It is true that historically refining has been the weakest part of the value chain in terms of generating margin in the oil supply chain. But I think if you're looking at U.S. assets that are running at 98% and not running into unplanned outages. And with crack spreads of $100 a barrel, I think we now have U.S. refining is probably the strongest part of the entire oil value chain right now. Now we go to Ron Stein, who's an insider in the oil and gas space. He's been vocal about refining across the globe. One of the big things that's happening right now with the war between Ukraine and Russia and the Middle East issues, the price of fuel is going up significantly. There's two subjects, oil and fuel, because oil by itself is useless. It's black tar. Nobody uses crude oil. But if you build a multi-billion dollar refinery, then you can refine it into usable products, which is transportation fuels, the jet, the diesel, the gasoline, and all the oil derivatives that makes the 6,000 products on our daily lives that didn't exist 200 years ago. So transportation fuels is different than crude oil. Do you think these issues we are facing right now with the fuel, this is a short-term price spike, or do you think this is going to last long? I think it's going to last long, and it's the good news and the bad news. For me, Ukraine attacks on Russia has made it apparent to the world that this is very fragile infrastructure. Now, the bad news is that there's so many crazies in this world that you could take out a local refinery. So I think it's brought to the attention how critical and vulnerable this infrastructure is. And it doesn't matter if you've got the crude oil. If you don't have a refinery to make it into something usable, you're in tough doo-doo. And Russia's seeing that, and I think the rest of the world can see that, too. or could experience a similar situation. So one of the things that has happened, a lot of refineries are now, their income is going up significantly. Like there's a huge margin between the refining and the crude oil price. Can you tell us about that? How does that happen? That gets down to the basics of supply and demand equation. You know, you reduce the supply, the demand's not going away. Demand's still there. And you start eliminating the supply and demand's up there. So it's just natural that prices are going to go up because it takes years to build a refinery. You know, you've got to get the site. Refineries by themselves are relatively small in footprint. Most of the 500-acre site is tankage. They store the different transportation fuels, the crude oil, the additives, et cetera, et cetera. So it's mostly tankage that makes up the site. But to get a large site and make sure you've got a contract for crude oil to support it, then you wind up designing it and building it. So it takes years to build a new refinery. And one of the other things that's happening is that in the U.S., we haven't built many refineries. And the refining capacity globally, we've shifted some of that to other countries. Can you tell us about that? Yes. In the United States, there's about 130 refineries. Throughout the world, there's a little over 800. And currently, there's about 160 new refineries under construction. Everything except one, 159 of them are outside the United States, in China, Asia, Africa, you know, around the world. And they're going to have the capacity. So the United States, if our demand keeps increasing, we'll be importing from foreign countries around the world. But we have enough for now, right? Except for California, right? Except for California, yes. I know in California, the price of diesel is going to continue to go up. And if we have one more refinery go down, it's really going to go up because we'll be importing from Asia and China the aviation fuel to run our 40 military air bases and our nine international airports. And they will pretty much have total control of that fuel supply. And it's ironic, too, because refineries in California are the cleanest in the world with all the regulations that you've got to adhere to. but refineries in foreign countries don't have the same environmental regulations. So they're, I would say they're polluters compared to ours. And then to put their fuel on a ship and it takes 45 days to come across the Pacific Ocean and those ships are polluting. So we're really just delegating emissions somewhere else, but I think we're breathing the same air. And what about the rest of the country? So you said that out of all the new refineries that are built only one is built in the U.S. one one is being built in Brownsville, Texas California one time we had 40 refineries today we're down to seven now a lot of the refiners were small and isolated products but uh today we got you know the seven that are left there are seven monsters they're big ones and if they go they ain't coming back you mentioned that out of the 160 new refineries that we're building globally, only one is in the U.S.? Yes. Why? Because of, you know, permitting and everything else. You know, we have 350 million people and it's condensed and to find the acreage to put a site is one thing and then you've got to get us, you know, a commitment to bring in the crude oil so that there's a lot of pieces and parts to make this investment, investable investment And the regulations here in California, here in the United States, it's tough. But it's much easier to do it in foreign countries. Do you have any thoughts for the wars, like where they're going and how it would impact the fuel situation? Well, I think the refineries have gotten a lot of press because of the supply of crude oil. Because everybody keeps talking about crude oil. Well, you know, if they open the Strait, you know, oil's flowing again, prices are going to go down, time out. Unless you have a refinery, that oil is useless. You've got to refine it into something usable. Russia can't refine it because they've lost, I think, half of their capacity. In California, we've lost the two refineries that shut down took 18% of the supply away from the demand. So we're demanding 18% more from what the existing refiners can supply. And because California is an energy island, there's no pipelines from the rest of the country over those Sierra Mountains. And so if it's not made in California, it'd be made somewhere else. And that somewhere else right now is India and China. And then they're at risk because China has no crude oil. They import their crude oil. So they import their crude oil to make the transportation fuels. Then if they have any left over, they'll send it to us. But if there's restrictions in the flow through the strait, then China may not be getting as much crude as they need. And if they're not making enough transportation fuel, there'll be no extra to ship to somebody else. Ron, you're in this space and American companies are now doing really well. The oil and gas industry. The oil companies are doing well and the refiners are doing well. Right. Do you think the U.S. is benefiting from all of this? The industry is benefiting from it. The population is not, because it's affordability. You know, when the price of diesel goes up, the price of bananas goes up, you know, your shopping ticket goes up, and, you know, it causes labor prices to go up. And it's good news, bad news. Yeah, they're going to be making money. The bad news is we've got 350 million people in this country that are going to be paying for it dearly. Some people are thinking we should ban the export of diesel and those type of things, those type of products, so that we can keep the price lower in the U.S. What are your thoughts on that? Well, if you do that, you've got to store it somewhere, and you may not have storage tanks to do that. So you've got to plan. If you're planning on exporting, you don't have to store it on site. because if there's a surplus on the East Coast and we need it on the West Coast, there's no way for it to come to the West Coast. Like I said, there's no pipelines coming to California. You mentioned all the other products that come out of these refineries. And a lot of times people just think about the gasoline and the diesel and the jet fuel, but there's other things that come out. What do you think is the impact of other products? Do you think the prices of other things that we buy go up? It may. It may. Because, like I say, the oil derivatives makes everything. I mean, you know, hospitals didn't exist 200 years ago. You know, communication didn't exist 200 years ago. And all the electronics we have today, all the data centers, I mean, everything's made with oil. And we're a materialistic society. The notion that, you know, wind and solar energy is going to help us? No, no, no. They're only providing electricity. And the mindset. So you mentioned the media is making refineries look bad, but this is just a manufacturing. Right. Can you tell us more about the mindset? Well, the mindset is, you know, when people look at a refinery, they see all that smoke coming up. Well, most of the time it's steam because it's so regulated, especially in this country, especially in California. And, yeah, like you say, they're only suppliers. You know, we don't need a refinery. We need the products they make. And that's the thing that people have to accept. And oil, we keep talking about oil. We have the war. The flow of oil is coming through the strait. It's not coming through the strait. And when the strait opens up, hey, oil is flowing. You know, prices are going to come down. But unless you've got a refinery to refine that oil into something usable, oil is only refined. Unless you've got a refinery, you have nothing. Where do you think things will go from here? So you, Ron, I know you for a while, and you've been vocal about the refining and the products that come out of the refineries. Where do you think things will go from here? It's going to get very expensive because I see the refining capacity in America get less and less as the demand stays or increases. And, you know, again, the supply-demand equation is basic economics. You don't want to go that way. So we'll be importing from other countries. We might be able to import it at less cost. Emissions are probably going to go up because refineries in other countries don't have the same environmental controls that we do in America. And, you know, if they've got to ship it across the ocean, like China, I mean, it takes like 45 days to come across the Pacific Ocean. And when the ships arrive here, they're coming with bunker fuel, which is a low-grade fuel. So they're polluting as they're coming across the ocean. And once they get here, we're going to have to have enough capacity to refuel the ships, to get them out, and to go back. So it's a delicate balance for our materialistic society. And I wish the press would focus on not the crude oil, but the products that we need from crude oil. That's what's going to drive the economy. What will it take for U.S. to have a resilient supply of all these products? I think a total about-face. I think most of the country doesn't really support the refineries. And that's, like I said, that's the backbone. That's the backbone of our materialistic society. So I think instead of trying to drive them out of business, I think we should be supportive of keeping them in business. And just like the two in California that have gone down, reanimate them, bring them back, because we want to supply our own demands instead of relying on some other foreign country just for national security. Because it takes so much to locate one, to build one, You want to keep it running as long as you can. Ron Stein, it was great to have you on Market Insider. Thank you so much for being here. Thank you, Steve. My pleasure. Tell us what you think about these conversations. Do you think it's a good time to invest in refining and refineries? Make sure to tell us in the comments. I'm Siamak Akrami. This is Market Insider. We'll see you next time.