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The Energy Report

Phil Flynn
http://www.pricegroup.com/
pflynn@pricegroup.com


Diesel Cracks Back Over $100. The Energy Report 09/01/2026

It looked like crude was lining up for a typical Gulf Coast weather turnaround. Fox Weather reports Tropical Storm Edouard is forecast to “significantly strengthen,” potentially approaching hurricane strength, before making landfall early Tuesday afternoon along the Upper Texas and southwestern Louisiana coasts, bringing heavy rain, flash flooding, and life-threatening storm surge.

That puts a lot of iron in the path. The track runs right through the Golden Triangle — Motiva’s Port Arthur complex, the nation’s largest refinery, plus ExxonMobil Beaumont, Valero Port Arthur, and TotalEnergies Port Arthur. Lake Charles plants sit just east of the same weather. Motiva and Exxon were securing equipment and activating incident command Monday; plants were still running, but the risk of wind, surge, and flooding is real. That storm bid got flipped by the latest headline out of the Strait of Hormuz. Bloomberg reports a tanker was struck by projectiles while sailing out of the strait, and visible commodity traffic through the waterway has collapsed again as U.S.–Iran fighting resumed.

What really should catch the market’s eye is the diesel crack spreading back above $100 a barrel. Attacks on Russian refineries forced Moscow to extend its product export ban through September 30, tightening supplies in Europe and putting more pressure on U.S. refiners already running near-record paces. Those same companies are at the White House today. President Trump is meeting the big energy firms — including Valero, Marathon, Chevron, PBF, and Delek — to keep the United States well supplied, and the rest of the world with it. Hopefully by putting the great minds together all in one room instead of fighting with refining industry we can find ways to expand refining capacity which is obviously a major concern especially with the diesel crack spread as I’ve said before it’s not just the war that’s causing the surge in the diesel crack spread it’s been the year of the green new deal philosophy of trying to get rid of diesel refineries and diesel fuel altogether without a real alternative the short sighted energy policies in Europe of course continue to bite them as there are concerns of course that they will be able to stay warm for winter.

Thee key thing is that when we look beyond the noise and the storm the outlet for US energy is amazing not only are we the biggest producers by cutting a deal with Venezuela or their oil fields doubling are improving reserves the future looked very bright.

Take for example what’s happening on the natural gas side of the equation.. Cheniere Energy just announced it has substantially completed the Corpus Christi Stage 3 expansion in Texas. Bechtel handed over the seventh and final train on August 28. That one project lifts Cheniere’s liquefaction capacity by more than 20% — to about 56 million tons per year across Sabine Pass and Corpus Christi. Corpus Christi itself now sits at more than 25 mtpa. Same week, Cheniere loaded its 5,000th cargo — faster than any other LNG producer on the planet. First cargo was 2016. Ten years later they’re the biggest U.S. exporter and more than 10% of global LNG capacity. That’s not incremental. That’s a new industry.

Here’s why it matters the United States is producing natural gas like we’ve never produced it. EIA numbers show dry gas output in June at a record 112.3 Bcf/d, up 4.5% year-over-year. Full-year 2026 is tracking around 111 Bcf/d and heading higher in 2027. Permian associated gas, Haynesville, Appalachia — the wells keep coming. Domestic power plants, industry, and homes cannot absorb all of it. If you don’t have a market for that molecule, you get a glut, shut-ins, and producers who stop drilling. That’s not energy security. That’s a wasted resource.LNG is the relief valve.

Every extra train at Corpus Christi is another bid for U.S. molecules. Stage 3 alone is more than 10 mtpa of new demand — the equivalent of well over a billion cubic feet a day of feedgas when it’s running hard. That’s gas that otherwise sits in the basin or depresses Henry Hub. Exports give producers a floor. They keep rigs turning. They turn associated gas from a byproduct problem into a cash-flow engine. And they do it while the rest of the world still wants reliable, affordable molecules that aren’t subject to the next geopolitical surprise.

This is also why the Gulf Coast build-out is the real story of the decade. Cheniere didn’t just finish Stage 3 ahead of schedule, on budget, and safely. They already have Trains 8 and 9 plus debottlenecking under construction — another ~5 mtpa by late 2028 — and a permitting pipeline that gives them a shot at 100 mtpa by the mid-2030s. Golden Pass, Plaquemines, Port Arthur, CP2 — the fleet is growing. EIA already has U.S. LNG exports averaging about 17.4 Bcf/d this year and 18.6 next year. That is the demand sink U.S. production needed.

For allies, it’s insurance. Europe still needs molecules that aren’t a political weapon. Asia needs volume that arrives on time. Cheniere’s 5,000th cargo went to Asia. That’s not charity. That’s commerce. American LNG has become the swing supplier the world actually trusts. And for the American worker? This is steel, pipe, compressors, welders, ship pilots, and long-term off take contracts that pay for decades. Corpus Christi Stage 3 is the kind of project that used to take forever and run over budget. They did it in four years from full notice to proceed. That’s the playbook. It also raises hope how quickly we can increase output in Venezuela.

It means the United States can keep producing at record levels without drowning in its own supply. It means more U.S. gas finds a home instead of a flare or a shut-in. It means Cheniere — and the rest of the Gulf Coast — just got bigger at the exact moment the world still needs the molecules. Energy dominance isn’t a slogan when the trains are running and the ships are leaving. American energy is winning — and the scoreboard just added another 10 million tons. And in the short term of course we’ve got to keep an eye on this storm which means it’s critical that you download the fox weather app at the same time you can keep an eye on the business news by staying tuned to the Fox Business Network trade strategies and accounts are available by calling me at 888-264-5665 or emailing me at pflynn@pricegroup.com.



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Phil is one of the world's leading energy market analysts, providing individual investors, professional traders and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline and energy markets. Phil's market commentary, fundamental and technical analysis, and long-term forecasts are sought by industry executives, investors and media worldwide.

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