David Hay — Haymaker Daily: One energy fallacy after another... — the sequel to "A Tale of Two Inventories": John Kemp's U.S. "Big Three" refined-product composite (jet fuel, distillate, gasoline) has drawn down hard because refiners prioritised middle distillates at gasoline's expense with no spare capacity; record U.S. refined exports falsify the demand-destruction story; California has lost LA and Benicia since last fall, imports ~20% of its gasoline and Chevron is vectoring to close its last two in-state refineries into Asian suppliers who are short themselves — raising the possibility of 1970s-style gas lines — while the U.S. complex running flat out has put refinery margins essentially tied for the highest of the 21st century, exploding Chevron's profits and drawing Trump's wrath, "despite that oil prices have barely risen over the last 20 years (and, adjusted for inflation, are down by roughly 50%)" (Aug 5 2026)

The direct sequel to yesterday's "stealth erosion of global refined product inventories," now with the hard U.S. data. John Kemp — "the always reliable energy authority" — publishes the composite of "The Big Three" (jet fuel, diesel/distillate and gasoline), and in the country with "some of the planet's most accurate inventory data" those stocks "have been significantly drawn down." The mechanism is a product-mix squeeze: "refineries have prioritised production of jet fuel and diesel at the expense of gasoline to relieve the worldwide shortage of middle distillates. But the lack of spare capacity has meant gasoline stocks have come under intense pressure." The falsification of the bear story follows: "American refined exports to the rest of the world have risen to a record rate," which "calls into question the prevalent belief that there has been significant demand destruction for oil-related fuels." Then the regional time-bomb — Los Angeles and Benicia shuttered since last fall, "almost 20% of [California's] gasoline consumption now being imported" and rising, and "ominously, Chevron is vectoring to close its last two California refineries" — into Asian suppliers "facing a serious shortage of refining capacity themselves" who are "highly likely to restrict shipments across the Pacific," raising "the possibility of 1970s-like gas lines." Running flat out to cope, the U.S. complex has driven refinery profit margins to essentially tied for the highest of the 21st century — "a key reason why profits at companies like Chevron have exploded, incurring the wrath of President Trump," even though "oil prices have barely risen over the last 20 years (and, adjusted for inflation, are down by roughly 50%)."

One-line take: a near-macro Daily that supplies the evidence yesterday's post said the market cannot see, and lands on the one equity consequence — Chevron (CVX), whose profits "have exploded" on 21st-century-high refining margins and who is, for that reason, the administration's scapegoat. The chain of argument is four links long and each is a separate falsifiable claim. (1) The data exists where it matters. The U.S. "has some of the planet's most accurate inventory data" — so the un-instrumented series flagged on Aug-4 is only invisible globally; domestically it is measurable, and it shows "The Big Three" composite "significantly drawn down." (2) The drawdown has a stated cause, and it is capacity, not weather. Quoting Kemp directly: "Refineries have prioritised production of jet fuel and diesel at the expense of gasoline to relieve the worldwide shortage of middle distillates. But the lack of spare capacity has meant gasoline stocks have come under intense pressure." A refinery is a fixed slate — choosing to make more distillate is choosing to make less gasoline — so a distillate shortage propagates into a gasoline shortage whenever there is no slack in the system. (3) Demand destruction is refuted by the export tape. "American refined exports to the rest of the world have risen to a record rate. This high demand for U.S. refined products calls into question the prevalent belief that there has been significant demand destruction for oil-related fuels" — the same falsification structure as Jul-30's crack spread (margins), now run on volumes. (4) The shortage has a named geography. California, with "two large facilities… Los Angeles and Benecia, shuttered since last fall," now imports "almost 20% of its gasoline consumption," "a number that is likely to rise as more in-state refineries are taken off-line" — with the parenthesis that carries the risk: "(This assumes that offshore suppliers have the ability to deliver.)" And "ominously, Chevron is vectoring to close its last two California refineries." Because the Asian suppliers of those imports "are facing a serious shortage of refining capacity themselves and are highly likely to restrict shipments across the Pacific," Hay raises "the possibility of 1970s-like gas lines before long unless the U.S. limits overseas shipments and redirects those to California" — a policy fix he immediately prices: "doing so, however, would damage America's reputation as a reliable supplier to the rest of the world." The investment consequence is stated as a margin fact rather than a recommendation: the complex "has been running flat out," which "accounts for the spike in refinery profit margins to what are essentially tied for the highest of the 21st century," and that is "a key reason why profits at companies like Chevron have exploded." The closing frame is the political one, and it is the standing Haymaker grievance: the industry earns a windfall and is punished for it — "no matter which party is in the White House, the oil industry continues to be a recurring scapegoat" — while the price of its product "has barely risen over the last 20 years and, adjusted for inflation, is down by roughly 50%." (The inflation-adjusted point restates Jul-30's "oil is an inflation-adjusted bargain" using 20 years instead of 2007.) CVX is the only security named; the refiners themselves, the exporters and the Asian importers are described but not tickered, and none is inferred.

1. Stocks & names mentioned

Ticker	Name	Research	View	What he said	At
CVX	Chevron	QT · SA · STK · FA	Positive	The only named security, and it appears twice — as the marginal supplier walking away and as the earnings beneficiary being punished for it. On supply: "Ominously, Chevron is vectoring to close its last two California refineries" — the capstone of a state that has already lost Los Angeles and Benicia since last fall and now imports "almost 20% of its gasoline consumption." On earnings: with the U.S. complex "running flat out" and "the spike in refinery profit margins to what are essentially tied for the highest of the 21st century," that is "a key reason why profits at companies like Chevron have exploded, incurring the wrath of President Trump." Hay's stance is on Chevron's side of that fight — "no matter which party is in the White House, the oil industry continues to be a recurring scapegoat, despite that oil prices have barely risen over the last 20 years (and, adjusted for inflation, are down by roughly 50%)." A margin-windfall read on the integrated business, consistent with the standing preference for oil-producer equities over the barrel (Jul-30, Jul-26); no price, rating or portfolio action is attached.	read ↗

"View" is Haymaker's stance in this post. This is a mostly macro Daily — CVX is the only ticker named, and it is discussed as an operating fact (closing California refineries; exploding profits on record margins) rather than given a rating. Referenced only (not rowed): John Kemp (the London-based analyst whose "Big Three" inventory chart is the post's central exhibit), the shuttered Los Angeles and Benicia refineries, the unnamed Asian gasoline suppliers, and President Trump. No refiner (VLO/PSX/MPC) is named, so none is inferred. Research: QT Qualtrim · SA Seeking Alpha · STK Stock Analysis.

2. Talking points

The follow-up — yesterday's invisible series, now measured

Explicitly a sequel: "Following up on yesterday's Daily on the stealth erosion of global refined product inventories — such as jet fuel and gasoline — the always reliable energy authority, John Kemp, recently published a visual that drives this home."
Why the U.S. is the right place to look: it "has some of the planet's most accurate inventory data," and there "those have been significantly drawn down for 'The Big Three'" — the white composite line of jet fuel, diesel (distillate) and gasoline.

The mechanism — a fixed slate, and no spare capacity

Kemp, quoted directly: "Refineries have prioritised production of jet fuel and diesel at the expense of gasoline to relieve the worldwide shortage of middle distillates."
The binding constraint: "But the lack of spare capacity has meant gasoline stocks have come under intense pressure." With slack in the system, a distillate shortage stays a distillate shortage; without it, the shortage migrates across the product slate.

The falsification — record exports vs the demand-destruction narrative

"As a result, American refined exports to the rest of the world have risen to a record rate."
The inference: "This high demand for U.S. refined products calls into question the prevalent belief that there has been significant demand destruction for oil-related fuels." Same structure as Jul-30's crack-spread argument, tested on volumes instead of margins — the second independent refutation of the "consumption is collapsing" explanation for cheap crude.

California — the refineries already gone

"He also notes the continuing closures of refineries in California, with two large facilities in the state, Los Angeles and Benecia, shuttered since last fall."
The consequence: "This reduced production capacity has led to almost 20% of its gasoline consumption now being imported, a number that is likely to rise as more in-state refineries are taken off-line." And the conditional that carries the whole risk — "(This assumes that offshore suppliers have the ability to deliver.)"

The capstone — Chevron's last two

"Ominously, Chevron is vectoring to close its last two California refineries."
Read against the margin data later in the post, the point is not that refining is unprofitable — margins are at 21st-century highs — but that the state is uninvestable for a refiner, so the marginal barrel of California gasoline has to arrive by ship.

The import counterparty can't deliver either

"Aggravating the situation, the Asian countries that have supplied the Golden State's gasoline imports are facing a serious shortage of refining capacity themselves and are highly likely to restrict shipments across the Pacific."
The stated outcome: "This raises the possibility of 1970s-like gas lines before long unless the U.S. limits overseas shipments and redirects those to California."

The policy fix is not free

Redirecting exports domestically would work mechanically — "Doing so, however, would damage America's reputation as a reliable supplier to the rest of the world."
The trade-off is the whole point: the same record export flow that proves demand is intact is also the buffer that would have to be seized to keep California supplied. There is no configuration in which both hold.

Margins — the 21st century's high, essentially tied

"To cope with this situation, the U.S. refining complex has been running flat out."
"This accounts for the spike in refinery profit margins to what are essentially tied for the highest of the 21st century." Utilisation at the cap with product stocks still falling is the textbook margin regime — the refiner, not the producer, captures the scarcity.

Chevron's windfall, and the scapegoat cycle

"It's also a key reason why profits at companies like Chevron have exploded, incurring the wrath of President Trump."
The standing grievance, stated as a bipartisan constant: "No matter which party is in the White House, the oil industry continues to be a recurring scapegoat" — political risk that attaches to the sector at exactly the moment its earnings work.

The 20-year price check

The scapegoating is answered with the price record: "despite that oil prices have barely risen over the last 20 years (and, adjusted for inflation, are down by roughly 50%)."
A wider-lens restatement of Jul-30's nominal-price illusion (crude at 2007's level against ~60% cumulative CPI). The measurement discipline is the reusable bit — compare a commodity's price in real terms before calling it high.

3. In plain English

A jargon-free note on why the one named company matters here. (Companion to the table above; renders on its consolidated page.)

CVX — Chevron Positive

Chevron is one of the two big American integrated oil companies: it pumps crude, ships it, and also runs refineries that turn it into gasoline, diesel and jet fuel. This post is really about that second half of the business, and about a squeeze that has made it unusually profitable.

Here's the squeeze. A refinery is a fixed piece of equipment: choosing to make more diesel and jet fuel necessarily means making less gasoline. Because the world is short of diesel and jet fuel, refiners have tilted their output that way — and since there is no spare refining capacity anywhere to make up the difference, gasoline stockpiles are now draining hard too. With every plant running at maximum, the profit a refiner earns for turning a barrel of crude into fuel has spiked to roughly the highest level of this century. That is why Chevron's profits, in Hay's words, "have exploded."

The second thread is California, and it points the other way. Two large refineries there (Los Angeles and Benicia) shut last autumn, so the state now ships in about a fifth of the gasoline it burns — and Chevron is preparing to close its last two California plants as well. Hay's worry is who fills the gap: the Asian refiners California buys from are short of capacity themselves and may well stop exporting, which he thinks could produce 1970s-style queues at the pump unless Washington forces American fuel exports to be redirected home (which would wreck America's standing as a dependable supplier).

His stance on the company is sympathetic rather than a formal recommendation. Chevron is earning a windfall because it is doing the scarce thing, and it is being attacked by the White House for it — a pattern Hay says repeats "no matter which party is in the White House." His retort is the price record: oil today costs barely more than it did twenty years ago, and after adjusting for inflation it is roughly half as expensive. Read this as another reinforcement of his standing preference for owning the companies that produce and process energy rather than the barrel itself — not as a fresh buy call with a target attached.

Summary derived from the paid Haymaker newsletter (text in transcript.txt) for personal study. Not investment advice. © Haymaker / David Hay for source material.