Posts by Hoekstra Trading LLC

This chart shows a steadily growing gap between the price of Marathon Petroleum Company stock (MPC, in green) and Phillips 66 stock (PSX, in red) since the first trading day of 2021.  Since the summer of 2021, I have been pointing to this gap and saying it will continue to grow because it is caused…

If you buy premium gasoline you’ve probably noticed its price differential versus regular has been increasing. That is a sign of the rising value of octane which is the primary yardstick of gasoline quality and price. This blog series is about a new gasoline sulfur specification called Tier 3 which is causing lower octane quality…

A meeting in Washington D.C. In June 2022, U.S. Secretary of Energy Jennifer Granholm called senior refining executives to Washington DC asking for their recommendations on how to increase gasoline supply from U.S. refineries.  To our knowledge, the only recommendation coming from that meeting was to relax sulfur specifications on fuels, including the new Tier 3…

A commodity that’s gone straight up While the stock market, crude oil, fuel prices, and cryptocurrencies have  gone up and down wildly, the price of one important commodity has been quietly going straight up for years.  That commodity is octane.  Figure 1 shows that the retail price of octane, measured by  the difference between the…

The U.S. EPA has released the average gasoline sulfur number for U.S. gasoline in 2021. It is 10.04 parts per million (ppm) sulfur. This complies almost exactly with the Tier 3 standard requirement of 10 ppm. 2020 was the first year the Tier 3 standard was fully in-place and U.S. refineries over-achieved with a final…

The price of Tier 3 sulfur credits has quadrupled in recent months as refiners scramble to balance the books on their obligation to meet the 10 ppm gasoline sulfur mandate on gasoline sold in the U.S. in 2022. Some refiners are making last-minute adjustments to reduce their gasoline sulfur in the 4th quarter — these…

While the stock market, crude oil, fuel prices, and cryptocurrencies have  gone up and down wildly, the price of one important commodity has been quietly going straight up for years.  That commodity is octane.  Figure 1 shows that the retail price of octane, measured by  the difference between the pump prices of premium gasoline and…

Biden ideas to reduce fuel prices:     Ban exports = BAD IDEA     Windfall tax = BAD IDEA     End moratorium on investment for conventional (not renewable) clean fuels = GREAT IDEA Question from Petroleum Quarterly Technology, 4Q2022 issue: In view of the recent wave of refinery closures, including five in the US during 2021…

In this morning’s 3rd quarter earnings conference call, Valero executives were asked about possible steps to increase U.S. gasoline supply and reduce gasoline price. Their answer confirms Hoekstra Trading’s predictions that the Tier 3 gasoline sulfur specification is causing reduced gasoline supply and high gasoline prices in the US. Here is that Q&A: Connor Lynagh,…