Why are gasoline prices so high?

We don’t have a shortage of gasoline. We have a shortage of marketable gasoline.

This chart, from an Argus Media article shows the price differential between marketable (Tier 3) gasoline and unmarketable gasoline:

The spike is an indicator of octane value which has skyrocketed this year taking the price of gasoline with it.

The underlying cause is the new Tier 3 gasoline sulfur specification (10 ppm sulfur) which just kicked in this year and is causing destruction of $billions/year of octane in North America.

That’s why gasoline prices are so high.

This is not temporary. It is structural and will persist until more US refiners address the underlying cause.

The refining industry denies Tier 3 is an issue.

That’s why you don’t hear or read anything about it except from the Hoekstra Trading client group who have studied it in depth and have been banging the drums predicting this octane/sulfur squeeze.

Why is the industry in denial?

It is clear the C-Suites see Tier 3 as a done deal, an non-issue, old history. I think they were led to believe, by process licensors, it was an easy specification that would not affect gasoline cost or refining profitability.

Every refining executive should have a comprehensive understanding of the technical, regulatory, and economic aspects of Tier 3 gasoline, the sulfur credit program and how they affect your profitability. Those wanting a quick education on the Tier 3 issue should get Gasoline Desulfurization for Tier 3 Compliance, which will make you an expert in a day. Once you have become expertly informed of the problem, you can save yourself and your team years of research by buying Hoekstra Research Report 8. We saw the problem coming, gathered the required data, ran the simulations and analyzed the results so you and your team can concentrate on initiating informed remedies that will immediately go to the bottom line. The report includes detailed pilot plant and commercial field test data, full detail of sulfur credit prices, process and economic models to help refineries quickly improve gasoline optimization, investment decisions, sulfur credit strategy and refining margin capture in the Tier 3 world.  You will also get the spreadsheet tools we developed that others are using now to help manage Tier 3 gasoline production and credit strategy. Don’t get caught panic buying after the credits spike!