Let's Make a Deal = Not

Friday August 7, 2026 Let’s Make Deal – Not Trump’s energy frustrations are not liable to be resolved this year. Tuesday, Trump told Fox News that the US and Iran were close to a deal to open the Strait of Hormuz. He then leaped to the conclusion that would lower the price of gasoline from the current nationwide price of $4.06 to $2.50. Anyone with that much of a misunderstanding of the world-wide supply chain from crude oil to refiners to your neighborhood pump clearly does not understand the big picture. Here is reality. The last new refinery built in the United States occurred in 1977, fifty years ago. India’s Reliance Industries intends to build one this year at Port Brownsville. But US refineries are running full tilt to satisfy the demand of 65 million barrels of gasoline, diesel, and jet fuel consumed daily. Darren Woods, CEO of Exxon, remarked that he has never seen such an imbalance of refinery capacity versus demand. Given the government’s demand for electric vehicles, refiners are in no mood to build new capacity. China was exporting 650,000 to 900,000 barrels of refined product a day. But the Iran situation has decreased supply to China. Current exports ae about 350,000 barrels a day. US inventories of crude are the lowest in 42 years. It is no surprise that refiners Marathon, Phillips 55, and Valero reported the second highest quarter earnings in four years. The conflict in Hormuz has raised energy prices so that Exxon Mobil posted a $14.5 billion profit containing $5.5 B from refining. War in the Middle East always fosters uncertainty over supply, raising price. Trump was assured by Defense (War) Secretary Hegseth the conflict would be short and easy. It has not worked out that way. It has been a volatile month for oil prices. West Texas crude traded under $70 July 6. It roared over $90 by July 23. Talk of a deal dropped the price briefly under $75. Today it trades in a wide range from $76.53 to $78.77. Jalf of the $70-90 range is $80. For lack of a better estimate, that appears to be the price for the time being. Energy stocks showing a bullish percent have dropped to 33% of total. Uncertainty does not bolster confidence in share investment. Stock indexes have hit new highs. The jobs report, surprise, today reported a loss of 23,000 jobs. May’s report of some 120,000 jobs was revised in half. The two-year Treasury note yield remains at 4.26%, way above the March low of 3.4%. Investors still weigh the massive issuance of corporate debt to finance new AI projects. Trump heads to the mid-term elections with retail gasoline prices much higher than he would like. Why start a Middle East fight in an election year? www.professorelam.blogspot.com