Forget the Flood. The Energy Report 10/06/2025

Before the meeting, reports indicated that Russia supported a moderate increase, while Saudi Arabia advocated for a larger adjustment. Ultimately, the group reached a consensus by adopting the same increase as in October, maintaining market uncertainty regarding potential oversupply issues. Yet we continue to get these stories about dubious floating storage numbers and the potential for a glut and a slowdown in Chinese demand, all of which would suggest a massive coming cloud and even the futures curve seems to be suggesting the market is oversupplied. But we believe that curve could switch very quickly. At the end of the day, we are in shoulder season, so the speculation about an oil glut is really based on a lot of pessimism—pessimism we don’t feel is justified. We expect to see the Federal Reserve cut rates, which should increase oil demand, and the concerns that tariffs are going to create a global recession are also overimagined.

Reuters is reporting that – Ukraine’s military said on Monday it had struck one of Russia’s main factories producing explosives for a wide variety of ammunition for Russia’s army as well as an oil terminal in occupied Crimea fueling Moscow’s war effort. Ukraine’s forces have stepped up long-range attacks on strategic Russian targets, particularly oil facilities, as diplomatic efforts to end the more than 3-1/2-year-old war have stalled. As there is a report that The Russian Defiance Ministry announced strikes on Ukrainian energy and oil facilities, targeting areas supporting long-range drones and military fuel storage. The attacks, involving air force, drones, artillery, and missiles, hit 145 locations. Reuters has not verified this report.

If you think things are bad, take a look at California—what a mess when it comes to energy policy. So much so that Governor Gavin Newsom is now sounding like the “drill, baby, drill” governor and total opposition, having to reverse every policy that he put in place that only caused pain for the poor and the middle class in California, cost jobs in California, caused energy companies to shut refineries and leave the state.

The recent explosion and massive fire at Chevron’s El Segundo refinery exposed just how vulnerable California’s energy supply truly is. This wasn’t just a local incident—it was a warning shot for the entire West Coast. With so few refineries, a single disruptive event threatens supplies of gasoline, jet fuel, and other critical products. Governor Newsom’s shifting energy stance—most recently admitting policy failures and authorizing more oil drilling—underscores years of regulatory missteps. Delayed profit caps and hasty bailouts reveal a state race to fix self-inflicted wounds. The closures of refineries like Phillips 66 and Valero could wipe out up to 20% of California’s gasoline production, costing jobs and investment and forcing the state to seek emergency bailouts just to maintain basic energy services.

California’s customized fuel blends, strict low-carbon mandates, and bans on gasoline cars have isolated the state from national and global markets. When disaster strikes, imports can’t make up the difference, resulting in 20-50 cent spikes at the pump that impact families, truckers, and neighboring states alike.

After years of chasing “impossible green dreams,” the Governor is now reversing course, relaxing rules, and offering subsidies. But the damage from years of piecemeal regulation and short-term fixes is clear—chronic shortages and high costs have become the norm, fueled more by political theater than practical energy security. It’s time for common-sense solutions. California must prioritize energy security and affordability above political experiments and regulatory patchwork. Otherwise, the state’s families and economy will continue to bear the brunt of unreliable and expensive energy.

Meanwhile, California, Governor Gavin Newsom signed Assembly Bill 30, paving the way for E15 gasoline—with 15% ethanol content—to be sold in the Golden State, pending environmental review by the Air Resources Board (CARB). Assemblymember Alvarez highlighted E15’s potential to lower prices while keeping environmental standards front and center, applauding state leadership for making affordability a priority. They used a report from researchers at UC Berkeley, and the U.S. Naval Academy estimate that E15 could knock up to $0.20 off every gallon, saving Californians as much as $2.7 billion annually. However, achieving these savings would require significant upgrades to infrastructure at retail stations. E15 is already available at over 3,000 stations in 31 states and, according to a UC Riverside study, its wider adoption hasn’t led to increased environmental harm. Instead, results show that more ethanol in gasoline reduces particulate emissions.

After years of chasing “impossible green dreams,” the Governor is now reversing course, relaxing rules and offering subsidies. But the damage from years of piecemeal regulation and short-term fixes is clear—chronic shortages and high costs have become the norm, fueled more by political theater than practical energy security. It’s time for common-sense solutions. California must prioritize energy security and affordability above political experiments and regulatory patchwork. Otherwise, the state’s families and economy will continue to bear the brunt of unreliable and expensive energy.

It looks like natural gas is getting a summer like boost in prices as temperatures in places like Wisconsin were more like July than October. At the same time Fox Weather is reporting that Invest 95L likely to become tropical depression on approach to Lesser Antilles this week. Right now, the NHC is giving Invest 95L a medium chance of developing over the next two days, and a high chance of developing over the next week.

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