Actionable insights — Haymaker Daily: One energy fallacy after another...

1. When a series is "un-instrumented," don't give up — find the best-instrumented sub-market and use it as the proxy

1. Start from the admission that the global number does not exist or is unreliable. Do not conclude the variable is unknowable; that is the error the crowd makes.
2. Ask which single country, exchange or reporting regime publishes the highest-quality version of that series, and whether it is large enough to be representative of the global condition.
3. Use that sub-market as the read-through, and say out loud why it generalises (shared product slate, shared trade flows, shared demand drivers) — otherwise you have swapped an unknown for an anecdote.
4. Prefer a named specialist who publishes that series regularly over a one-off aggregate: the value is in someone tracking revisions and reclassifications week to week.
5. Watch the composite, not one product in isolation, so a mix shift inside the barrel cannot be mistaken for a change in total inventory.

• Weekly U.S. product-stock prints (jet fuel, distillate, gasoline) and the composite of the three. A composite that stabilises while crude keeps drawing is the first sign the product squeeze is resolving; a composite still falling with crude flat is the squeeze intensifying.

2. Read a fixed production slate — a shortage in one output is a promise of shortage in the next

1. Identify processes where one input is converted into several outputs in near-fixed proportion — a refinery's barrel, a smelter's ore, a mine's polymetallic concentrate, a foundry's wafer starts.
2. Determine which output is being prioritised and why. Prioritisation always has a victim: the co-product being made less of.
3. Ask the only question that decides whether the victim matters: is there spare capacity? With slack, the mix shift is absorbed and nothing propagates. Without slack, the shortage migrates.
4. Once you know it propagates, position ahead of the second shortage — the one the market has not yet priced — rather than the first, which is already in the headlines.
5. Note that the operator captures the scarcity in this regime: when the conversion asset is the bottleneck, the margin on conversion widens even if the input price is flat.

• Refinery utilisation rates pinned near the physical maximum while product stocks keep drawing — and, in reverse, the first meaningful capacity additions or restarts, which would reintroduce the slack that stops the propagation.

3. Falsify a demand narrative with the export tape, not with an opinion

1. Write down the market's stated reason for a low price — here, "demand has been destroyed." Attack the reason, not the price.
2. Find a volume series that the stated reason would have to suppress. Exports are ideal: they are the residual after domestic demand is served, and no one ships product abroad at a record rate into collapsing demand.
3. Check whether the volume is at a record, a trend high, or merely fine — the strength of the refutation scales with the extremity of the print.
4. Cross the volume read with a margin read taken earlier (what buyers will pay to convert). Two independent series pointing the same way is a conclusion; one is a datapoint.
5. State the conclusion as a falsification ("this calls into question the prevalent belief…") rather than as a forecast, so it survives being early.

• The record export rate rolling over while product stocks stop drawing — the combination that would finally validate the demand-destruction story. Rising exports plus falling stocks is the bullish configuration.

4. Price a regional supply gap by interrogating the counterparty who has to fill it

1. When local production closes, quantify the import dependency that replaces it — as a share of consumption, and the direction that share is heading as more capacity retires.
2. Do not stop at "imports will cover it." Name the specific exporting region and ask whether it has surplus capacity, or is itself short.
3. Assume an exporter facing domestic scarcity will restrict shipments; export bans are the standard political response and arrive faster than new capacity.
4. Identify the policy fix and then price its cost. A fix that solves the physical problem by breaking a commercial reputation is a real option, but not a free one — and its unattractiveness is why the shortage may be allowed to happen.
5. Convert the whole chain into a monitorable: the import share, the exporter's own balance, and any announced retirement that moves the marginal barrel further offshore.

• Formal closure announcements on the last California refineries, California's import share climbing past 20%, any Asian export restriction on refined products, and West Coast retail price spreads over the Gulf Coast — the first place the gap shows up in a price.

5. Before accepting a "windfall profits" framing, price the commodity in real terms

1. When a sector's profits become a political target, separate two claims: are margins unusually high? and is the product unusually expensive? They are frequently opposite.
2. Deflate the product's price by cumulative CPI over a long window (10–20 years). A nominal price that "has barely risen" is a real price that has fallen sharply.
3. If the margin is high while the real price is low, the profit is coming from a bottleneck in processing or logistics, not from gouging the end user — which tells you where in the value chain to own the exposure.
4. Treat the political attack itself as a recurring, bipartisan feature of the sector — a persistent risk premium to underwrite, not a signal about the business.
5. Keep the two conclusions separate in the position: own the bottleneck for the margin, size for the policy risk.

• Concrete policy moving from rhetoric to rule — an export restriction, a windfall levy, or a mandated redirect of cargoes — which would transfer the margin away from the refiner and is the real risk to owning the bottleneck.