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With wars going on in Ukraine and the Middle East, margins for fuel producers have gotten “insane.”

It’s never been a better time to turn oil into gasoline and diesel, and the United States refining industry is processing every drop it can.
America’s refineries are currently running at over 97% utilization, up slightly from the week prior, according to the Energy Information Administration, and at their highest rate since 2018. In the Gulf Coast refining complex specifically, refining capacity has been above 95% for 19 straight weeks, well surpassing the previous record of 15 weeks in 2022, according to Gulf Oil advisor Tom Kloza.
Meanwhile, refiners are putting off whatever maintenance they can. But refineries may have to undertake the large-scale, prescheduled “turnaround” operations that happen in the fall, and can take facilities offline for months.
The reason? It pays to wait. The “crack spread” — which measures the margin of refining three barrels of oil into two barrels of gasoline and one of diesel — sits at over $72.
“This is historically unprecedented,” Kloza told me, referring to both the continuously high levels of utilization for American refiners and the margins they’re receiving for running so continuously. “It’s insane.”
The insanity is the result of not one but two overlapping crises in the global fossil fuel industry. And while one (the protracted closure of the Strait of Hormuz) is in superposition between deterioration and resolution, the other (the relentless Ukrainian drone attacks on Russian refineries) shows no sign of letting up. Both crises contribute to the increasing unavailability of refined products like gasoline, jet fuel, and diesel, the scarcity of which has sent prices soaring.
Russia has banned diesel exports at least through September, leaving a hole that can be filled, at least in part, by American exports to the rest of the world. Diesel exports stand at around 1.8 million barrels per day, up from around 1.2 million a year ago.
One major refinery in New Brunswick, Canada that helps supply the Northeastern U.S. — which relies on diesel as a heating fuel in winter — is due to shut down for maintenance for over two months starting in September. Other refineries, however, have “basically every incentive right now to defer maintenance as long as they can,” considering the high profits they can get, Patrick DeHaan, head of petroleum analysis at GasBuddy, told me.
While refineries are designed to run up to (and maybe even slightly above) 100% utilization, “occasionally when you do run really hard, there can be some issues that come up from time to time,” DeHaan said. “Not all maintenance can be pushed.”
Even if U.S. refineries are operating as, uh, well-oiled machines, there’s another risk at this time of year beside mechanical issues: hurricanes.
While meteorologists expect this to be a below average hurricane season due to the above average El Niño stalking the Pacific, big storms can still knock out refining capacity on the Gulf Coast, where around half of the U.S. refining industry is located.
“If there’s a hurricane, they’re going to have to throttle back, and that will push the prices right up even more,” DeHaan said. A “perfect storm,” he said, could send those crack spreads up by another $20 to $30 a barrel. And yet he also noted that “it’s looking less and less likely that we’re going to see a perfect storm. El Niño is doing a great job mitigating risk for us.”
Even without adding a hurricane to the mix, fuel prices are high enough for anyone who uses diesel or heating oil — including truckers, farmers, and, eventually, New Englanders — to constitute a predicament.
“What we’re seeing now is extraordinarily rare to see,” DeHaan said, referring to the high level of output from U.S. refineries.
Nationwide, average diesel prices are $5.62 a gallon, according to AAA, up from $5.30 a month ago and $3.71 a year ago. In California, the number one agricultural exporter among the 50 states, diesel is $7.21 a gallon, hitting farmers (and eventually consumers) hard, as grapefruit, peaches, plums, apricots, avocadoes, tomatoes, cucumbers, apples, and figs (to name just a portion of the state’s bounty) are harvested in August and September.
The high level of exports has helped drive down inventories of distillate fuel, which are at their lowest level for this time of year since the EIA started keeping records in 1982.
The tightness of the market means that refineries are likely to be pushed near their limit. If any one goes off line — whether for maintenance or weather or anything else — it will likely mean a windfall for everyone else who can stay online.
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Hint: It’s one that tends to align with utilities.
Building trades want to build.
This desire for more and better big projects has meant that unions representing construction workers, utility linemen, operating engineers, plumbers, pipefitters, and so on have spent past decade-plus ping-ponging between praise and exasperation toward major Democratic priorities, especially when it comes to climate and energy policy.
Now, with a permitting bill negotiated by two Democrats and two Republicans in the Senate, much of the hardhat union sector is signing on as eager supporters. If the rest of the Democratic coalition can sign on to the bill, it may go some way to repairing a breach that has been widening since the Obama administration.
The modern fight over U.S. energy infrastructure began with a Canadian pipeline project.
Building trades were some of the most fervent advocates for the Keystone XL pipeline, which would have brought oil from the tar sands of Canada’s Alberta province into the continental United States — a project that Presidents Barack Obama and Joe Biden both opposed and which the latter finally canceled in 2021.
In the interim, the first Trump administration tested these unions’ historic allegiance with Democrats as the left became more vocal on climate policy. After Senator Ed Markey and Representative Alexandria Ocasio-Cortez released their Green New Deal outline in 2019, the AFL-CIO sent the two progressives a letter saying their plan “makes promises that are not achievable or realistic.” The signatories also included the United Mine Workers, the International Brotherhood of Electrical Workers, and eight more building trades, hardhat unions and federations that would be threatened by a rapid transition to 100% renewable energy. The signatory unions represented a little under 3 million of the AFL-CIO’s then roughly 12.5 million members.
“The broad trajectory is that the building trades unions have been supportive of building pretty much anything, whether it’s fossil, whether it’s data centers, whether it’s clean energy,” Todd Tucker, director of the industrial policy and trade program at the Roosevelt Institute, told me.
Actual Democratic policymaking turned out to be more favorable to unions, with infrastructure spending, money for domestic manufacturing, prevailing wage requirements, and subsidies for nuclear power and carbon capture all spurring infrastructure work during the Biden years. North America’s Building Trades Unions described the 2021 bipartisan infrastructure law as the “single greatest infrastructure investment in our nation’s history,” while the Laborers’ International Union of North America, a.k.a. LIUNA, praised the 2022 Inflation Reduction Act for “taking a commonsense approach to our energy needs.”
Now, it’s environmental groups that are either opposed to or mum on a piece of infrastructure legislation — the Bipartisan American Affordability and Jobs Act — while most of the building trades support it.
The United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada, otherwise known as the UA, signed the anti-Green New Deal letter and had a project labor agreement with the developer of the Keystone XL pipeline, but came out in support of the permitting deal. So did LIUNA and the International Union of Operating Engineers.
“In our industry, uncertainty means one thing: unemployment,” UA General President Mark McManus said in a statement. “It is long past time that Congress enacts meaningful permitting reform to put UA members to work faster.”
LIUNA’s president Brent Booker described BAAJA in a statement as a “monumental bipartisan permitting reform bill,” and urged “lawmakers in both parties to seize this moment, pass the Bipartisan American Affordability and Jobs Act of 2026, and finally deliver meaningful permitting reform.”
John Downey, the president of the Operating Engineers union, which signed a letter imploring the Biden-Harris transition team to maintain the Keystone pipeline’s permits, said in a statement that the union “applauds the bipartisan effort” on BAAJA, and that the “Operating Engineers look forward to working with Congress to pass this critical bipartisan bill.” Other Keystone XL supporters including the National Association of Manufacturers and the Chamber of Commerce have also come out in support of BAAJA.
There are a few industry and union players, however, that have been notably more circumspect: groups representing utilities and the International Brotherhood of Electrical Workers.
The Edison Electric Institute, the trade group for investor-owned utilities, has in the past supported overhauling the National Environmental Policy Act and Clean Water Act, which the bill would do. The group’s chief executive, Drew Maloney, told reporters after the release of the bill text that it was “encouraged” by the permitting provisions in BAAJA and was “reviewing” the transmission provisions.
The transmission provisions are largely seen as hostile to incumbent utilities. Many in Washington — especially Republicans — see them as a sign of decreasing utility clout. The bill would encourage and enable greater state and federal oversight of utilities’ infrastructure buildouts and would restrict the utilities’ “right of first refusal” on building new transmission lines. Many ratepayer advocates argue that these projects do more to build out the utility rate base than to increase grid reliability
This stance — supportive of permitting reforms, wary of grid provisions — puts utilities in a kind of mirror image with big environmental groups like the Natural Resources Defense Council, which is friendly to the transmission portions of the bill but skeptical of the permitting portions.
Senator Kevin Cramer, a North Dakota Republican and himself a former utility regulator, warned utilities to “not get carried away” in trying to push for changes to the deal, Punchbowl News reported.
“What I’m really watching these days around the Senate BAAJA bill is where does the IBEW end up,” Tucker told me.
An IBEW spokesperson told me the union is “reviewing the language and holding discussions with stakeholders across our industries. We represent workers across affected industries (utilities, transmission, construction, etc.), so the details are very important.”
The IBEW has just over 900,000 members, including construction electricians, utility linemen, technicians, and operators, with particularly strong representation within utilities. The union also has special political influence due to its large and widespread membership — anywhere there’s a power line, there’s likely one of the IBEW’s more than 800 locals.
Utility watchdogs like David Pomerantz, executive director of the Energy and Policy Institute, are not surprised to see utilities and the IBEW taking similar (non-)stances toward the bill.
He told me the IBEW is a particularly potent force on issues affecting utilities because “they’re a more acceptable face to the Democratic electorate,” referring to their lobbying in blue states and of Democratic politicians. “Among Democrats, the IBEW right now is much more palatable than the utilities.” The IBEW has been a counterweight to the Democrats’ and the public’s increasingly harsh turn against data centers, for instance, opposing moratoria in New England, the Mountain West, New York, and the Kansas City area.
The IBEW has also weighed in on more fine-grained utility policy, including right-of-first-refusal, well before the release of BAAJA. A union policy brief describes these as policies that “prioritize unionized utilities for critical projects, safeguarding labor standards and ensuring safe and efficient energy infrastructure development.” In Illinois, an IBEW local intervened in a rate case to oppose a proposed cut in the return on equity for local utility ComEd.
But the IBEW has also won project labor agreements for the type of long distance, high-voltage transmission projects that many climate and clean energy advocates hope the bill encourages.
“Some of their members work for the utilities and the utilities are getting rolled by this legislation, but some of the members work in construction and building,” Tucker told me.
The question going forward for the union, he said, is “do you align your union strategy with the current business model of your current employers? Or do you make a bet that these new jobs that are getting created and new builds are going to net out positive?”
On Indonesia’s climate win, hacking renewables, and John Cena’s ad
Current conditions: A tropical rainstorm in the southwestern Gulf of Mexico, likely strengthening into what would become Tropical Storm Isaias, is poised to dump rain on the southeastern United States and may become the Atlantic’s first major hurricane of the year • Italy is bracing for a type of heavy rainstorm known as a nubifragio, set to soak Naples and Rome later this week • The Dome Fire in Yosemite National Park has burned about 7,000 acres, and officials determined it was sparked by humans.
If you can’t wait a decade or more for a new Westinghouse AP1000 or one of the small modular reactors under development, your best bet to get more nuclear electricity is probably to upgrade an existing reactor to squeeze more power out of it, a process known as “uprating.” In February, the Department of Energy gave out its largest-ever loan to Southern Company to fund up to 6 gigawatts of uprates across the utility’s nuclear fleet. Last week, Amazon inked a 20-year deal with Constellation, the nation’s largest operator of nuclear reactors, to buy power from and uprate the Calvert Cliffs plant in Maryland. Google has now signed a deal with Constellation aimed at wringing out 890 megawatts of new power from 11 reactors across PJM Interconnection, the nation’s second-largest and arguably most stressed grid system. Asked whether the uprates are a sufficient replacement for building new reactors, Raiford Smith, Google’s head of power and energy for the cloud, said there was plenty of demand to go around. “New data centers are coming on at a gigawatt a clip,” he told me yesterday. “That means even with all the uprates, there’s still more to come.” Software giant Oracle also announced a deal last week to buy $300 million of nuclear power from a NextEra nuclear plant in Wisconsin to help fund its increased fuel costs.
In a sign of progress on the country’s leading SMR design, the Texas grid has officially received an application for one of GE Vernova Hitachi Nuclear Energy’s BWRX-300 reactors. The 300-megawatt unit borrows from GE’s decades-long history of building boiling water reactors, and has a leg up on other SMRs given that Ontario Power Generation and the Tennessee Valley Authority, two of the continent’s biggest state-owned utilities, are building the first and second BWRX-300s, respectively. But the application to connect to the Electric Reliability Council of Texas’ power lines comes, per Bloomberg, from Blue Energy Global, a developer that has promised to build out modular power stations that convert seamlessly from gas to nuclear. While the company considers itself “reactor-agnostic,” it’s first focused on building out plants with the BWRX-300.
The Indonesian government has halted the clearing of an area of rainforest in Papua roughly the size of Maryland to make way for farmland to grow crops for food and biofuels. In twin announcements at a sustainability forum in Jakarta, Hashim Djojohadikusumo, President Prabowo Subianto’s special envoy for climate and energy, said the government would shift rice and sugarcane projects to degraded land, delivering a victory to both conservationists who sought to preserve vital habitats and carbon sinks and activists who sought to preserve indigenous cultures who depend on the forests. “This decision renews Indonesia’s leadership in showing how to expand agriculture while protecting nature,” Glenn Hurowitz, the founder and chief executive of the advocacy group Mighty Earth, said in a statement. In a post on X, journalist Michael Grunwald, who authored a landmark book about the climate impact of food production, called the news “a massive victory for the planet.”
For the past 18 years, John Murdock, an attorney and self-described conservative Christian, has served in the legal division at the Department of the Interior. But he resigned abruptly last month over what he called the Trump administration’s “deeply troubling assault on the rule of law.” Under the administration, he wrote in a blistering resignation letter obtained by the investigative site Public Domain, the “all of the above” energy strategy “has seemingly morphed into ‘one of the above,’ solely focused on fossil fuels.” Murdock highlighted “recent decisions to shutter nearly complete offshore wind projects and to pay TotalEnergies hundreds of millions of dollars to renounce wind leases” as examples of “an assault on logic and the American taxpayer.” He added: “We are headed in the wrong direction.
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About a week ago, I told you the European Union was considering delaying implementation of its methane rule by a year to avoid jacking up prices on imported gas even higher when exporters inevitably fell short of the bloc’s strict reporting requirements for emissions throughout the fossil fuel supply chain. Well, it’s happened. European Commission President Ursula von der Leyen told EU lawmakers the postponement would save money. Her energy minister, Dan Jørgensen, cautioned that “we do not foresee this to be more than one year,” Reuters reported.
Meanwhile, Dutch researchers at the internet-scanning firm Modat told Reuters that hackers could seize full control of roughly 181 wind and solar sites around Europe and tamper with the administrative systems of thousands more. One wind turbine’s web page showed live data, “start,” “stop,” and “reset” buttons, and the turbine locations. “What we can map in hours, an attacker can map in hours too,” the report said. The researchers encouraged operators to take admin interfaces off the internet immediately.
Japanese automakers may be notoriously behind China on making electric vehicle batteries. But Suzuki has just released its first electric kei car — that beloved category of ulta-compact Japanese vehicles — using BYD’s batteries but undercutting the Chinese auto giant’s cheapest EV. The new Suzuki e-SKY will beat out BYD’s Racco as Japan’s cheapest mini EV, starting at about $13,500, according to Electrek.

The renewables industry is tapping in a WWE champion to make its case. John Cena stars in a new ad series backed by a consortium of wind and solar companies. “How powerful is clean energy?” he asks. “Pretend this is solar,” he says, flexing his right bicep. Flexing the left, he says: “And this is wind.” He then proceeds to obliterate a boulder by punching it into a statue of himself. It’s funny and charming.
Rob talks with the U.S. auto giant”s VP of batteries and sustainability, Kurt Kelty.
There are two big trends in the American battery sector at the moment. The first is that the electric vehicle market is deteriorating. GM, for instance, sold just 25,000 EVs in the third quarter of this year. Ford sold 6,000 EVs. Even the long-awaited return of the Chevy Bolt sold just 8,000 units — a small fraction of the vehicle’s already-limited production run. At the same time, the data center boom and the return of electricity growth is boosting batteries of all kinds not designed to power EVs.
Our guest today is in charge of navigating those opposing trends and figuring out what comes next. Kurt Kelty started his career at Panasonic in 1993, where he led the company’s battery research lab. He then went on to Tesla, helping to build the first Gigafactory. Since February 2024, he’s been vice president of battery and sustainability at GM. We talked about manufacturing generally, how the U.S. battery manufacturing sector should look, and how companies should be structured to compete globally, even though they’re making batteries for a mostly U.S. audience.
Shift Key is hosted by Robinson Meyer, the founding executive editor of Heatmap News.
Subscribe to “Shift Key” and find this episode on Apple Podcasts, Spotify, Amazon, YouTube, or wherever you get your podcasts.
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Here is an excerpt from their conversation:
Robinson Meyer: In 2024, GM retired the Ultium brand, except for the Ultium cells. And I would say that as an outsider, unlike other domestic automakers, the whole GM stack — where you have a single battery design that you then slot into different vehicles — seems to be working, and certainly seems to be producing profitable vehicles in a way that other automakers’ approaches were not.
So why retire the Ultium name? In traditional automakers, you talk about platforms and different cars designed on the same platform. But are there going to be a few platforms at GM, each with their own chemistry, and then you design different vehicles on top of that? Why get rid of Ultium when it seemed to be working?
Kurt Kelty: Yeah, so the way I look at the future when EV volumes really start to ramp up, we’re going to need prismatic form factor, pouch form factor, cylindrical form factor. We’re going to need nickel cell, high-nickel cells. We’re going to need some LMR cells. We’re going to need some LFP cells. We’re going to need it all. What we do here at GM is we design the right battery for the right application. And generally, depending on the need, you may need high-nickel. You may need LFP. Most likely, you’re going to need LMR in most of our applications. That’s what we think. And in some cases, the prismatic form factor will work best. In other cases, the cylindrical form factor will work best.
I do not see a future where we’re standardizing on a single chemistry or a single form factor. We tried to do that in the battery industry in the late ’90s when I was in the business, and all the laptop companies got together and said, we’re going to make a standard form factor, so we’re going to drive down costs. We made the form factor. Everybody signed up for it. Nobody used it. And nobody used it because it was ... The way to really customize your laptop was the battery. Everything else had been standardized.
At that point they had the hard drive, you had the floppy and the screen, and all those were standard components. The battery was the way you made it custom. And with EVs, it’s the same thing. The battery is going to decide your driving range, your acceleration, your space in the car, your safety of the car. I mean, it just determines so much about how fast you can charge it. All these things are determined by the battery. And so you’re not going to see a standard.
And so at GM, we are preparing for that by having this battery innovation center, this electrification powerhouse that we’ve got. It’s something that we’re really proud of. And in the future, we’re going to really take advantage of this.
You can find a full transcript of the episode here.
Mentioned:
The Senate’s Big Bipartisan Permitting Deal, Explained
On Rivian’s record-setting Q3
Previously on Shift Key: Data Centers Are Creating a New Kind of Battery Monster
This episode of Shift Key is sponsored by ...
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