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Biden’s War. The Energy Report 09/03/2026

By On September 3, 2026 - 9:21 AM · In Market Commentaries, Phil Flynn Energy Report
As the diesel crack spread tries to top after hitting another record high,  and US retail diesel prices hit the highest since mid-2022, I hear from some who blame what they call Trump’s war of choice for our diesel dilemma. Yet the reality is that the real war that has caused the diesel shortfall is the Russia-Ukraine war that started on President Joe Biden’s watch after he thought a small incursion might be OK, but President Joe Biden’s main war was against fossil fuels and especially diesel. In fact, the diesel shortage did not start with this war, as distillate inventories were well below seasonal norms for most of the Biden presidency from January 2021 through January 2025, running a rough average across the full term of about 12–18% below the five-year seasonal average, with the biggest shortfalls in 2022.
A lot of that shortage came with the Russia-Ukraine war, but also from Biden’s policies against fossil fuels, as it was almost toxic for refiners to try to produce diesel or be allowed to produce the type of oil that yields the highest percentage of it.
From 2020 into the early Biden years the U.S. lost well over a million barrels a day of crude distillation—and those barrels never came back as ULSD. PES in Philadelphia (~335 kb/d) stayed dark after the 2019 fire. Shell shuttered Convent, Louisiana (~240 kb/d), citing the energy transition and no buyer. Marathon Martinez and Phillips 66 Rodeo converted petroleum units to renewable diesel under California’s LCFS, the federal RFS, and tax credits—so those plants stopped making conventional diesel. Renewable diesel can stand in for ULSD, but it is feedstock-limited (soy, tallow, used cooking oil), steals hydrotreating capacity that used to make petroleum diesel, and does not refill East Coast or export tanks on command.
So don’t pin this diesel squeeze on Hormuz first.
Product tankers have been getting through with U.S. escorts, and Energy Secretary Chris Wright has said traffic can rise even while it takes months to normalize flows.
The missing diesel barrels are coming off Russian hydrocrackers. Ukraine has hit more than 20 of Russia’s 34 refineries—about three-quarters of Russian capacity—and is now punching secondary units that make diesel, gasoline, and jet.
Oxford Energy has Russian diesel output down about 20% and June diesel exports nearly two-thirds lower; Primorsk loadings were cut in half year-on-year.
Moscow has already banned gasoline and jet exports and extended the diesel export ban. That is a global distillate hole, not a one-strait story. Wright said it straight: Ukraine’s attacks on Russian refineries have reduced diesel supply worldwide and it is in the price; America’s offset is running more diesel, gasoline, and jet than ever, but U.S. plants are already near 97–98% and Middle East refineries are turned down. And US producers produced an all-time high oil production number coming in at 13,862 million barrels a day, that I think will be adjusted upward in the near future.
Drill , baby, drill isn’t a slogan anymore—it’s the scoreboard. U.S. rigs have climbed back toward 590, oil-directed activity is running well above last year’s levels, and the result is staring us in the face: crude production punching through 13.8–13.9 million barrels a day after April’s all-time monthly high, with natural gas already setting new records near 112 Bcf/d and headed for another annual high. American shale  just need the Feds to get out ofg the way  and  produced.
Treasury Secretary Scott Bessent said the same this week: Kyiv “wants to blow up Russian energy assets and refined products,” and that is part of the energy shock.
 Interior Secretary Doug Burgum sat with Wright and Trump while refiners got the message: more throughput, faster permits, energy addition not energy subtraction—because you cannot print a hydrocracker before harvest.
 Meanwhile Chevron just committed more than $7 billion to the country that some on Wall Street and in the Energy Industry called uninvestable, aiming to double Venezuelan output to about 600,000 b/d at under $20 a barrel.
Yes, read that again! I said $20 a barrel! And, of course, that Venezuelan crude is what our U.S. refiners were built for—some of the heavier grades of crude, but also the lighter ones that they can turn into products. But that’s not going to be an instant fix.
To get diesel prices down, we have to end Joe Biden’s wars—the first war against fossil fuels that really created the environment before the Russia-Ukraine war, as Russia tried to use its energy supplies as a weapon.
Because of that, Ukraine has attacked that weapon, but that leaves Europe particularly vulnerable not only to a shortage of diesel supplies but also of natural gas. You see, Biden’s war against fossil fuels in the United States is the same war that Europe tried to fight and has lost, as its economy is being strangled by short-sighted, climate-obsessed green policies that have left it vulnerable.
That’s where the Trump administration has been fighting back against this madness so people in this country are not in a position where they are unable to keep their families warm on a cold winter’s night.
Oil prices after spiking on the latest U.S. strikes on Iran are pulling back a bit as the market realizes Tehran can’t really fight back — but traders are still pricing the chance they do something desperate and stupid as the regime and the economy collapse.
WTI and Brent ripped higher after the biggest U.S.-Iran exchange since July, then steadied near six-week highs as President Trump said the renewed bombing campaign “won’t last too long,” while adding “we’re prepared to do another one.” He was blunt: “We hit them hard last night. Very hard.”
The U.S. took out the new radar, missile systems and mine-droppers Iran tried to rebuild along the Strait of Hormuz. “They can’t see the ships because we blew up the radar.” Trump also pointed to the Navy escorting tankers and “bringing lots of boats out every day with millions of barrels of oil.”
Energy Secretary Chris Wright said more than 17 million barrels moved through Hormuz on Monday — a wartime record — and that Washington is stripping Iran of its last card: holding the world hostage at the strait.
Treasury Secretary Scott Bessent went further, calling Iran a “death spiral” with the rial in freefall, inflation over 100 percent, and troops going unpaid.
 The plan, he said, is to “asphyxiate” and “collapse this murderous regime” with the blockade plus the toughest sanctions in history: “We are going to squash the economy.” Secretary of State Marco Rubio added that Tehran will “continue to feel the squeeze,” is “not serious” about talks, and that any attempt to slap tolls on Hormuz would mean “total chaos.” The market is starting to treat Iran as militarily spent and economically circling the drain. The risk premium isn’t gone — a collapsing regime can still lash out — but the idea that they can actually shut the Gulf off is looking more like a dying bluff than a strategy. If the flows keep moving and the desperate-stupid option stays on the shelf, this spike has room to give some of it back.
Even Bloomberg News Reports that Oil exports from the Persian Gulf have recovered to around two-thirds of pre-war levels, limiting the Iran war’s impact on global crude prices, according to Goldman Sachs Group Inc. Goldman analysts Daan Struyven and Yulia Zhestkova Grigsby estimate regional crude and product exports at 15 million to 16 million barrels a day as Strait of Hormuz crossings increase. That remains 7 million to 8 million barrels below pre-conflict levels but is well above March’s low of 5 million to 6 million barrels a day.
And in Europe, Biden’s Russia-Ukraine war and the long war on fossil fuels are causing a major risk. Bloomberg writes that Europe is nearing the end of summer with a low natural gas buffer, threatening to intensify a global fight for supply.
The region still needs over 100 terawatt-hours of gas — more than €7 billion ($8.1 billion) at current prices — just to reach its lowest storage target of 75%. Getting there would require an injection pace not seen this late in the season since the 2022 energy crisis. Goldman Sachs, Rystad Energy and Morningstar warn that winter prices could be pushed above €100 a megawatt-hour.
“The potential for a global ‘fight for fuel’ is there, particularly in a colder winter,” said Go Katayama, principal insight analyst for LNG at Kpler.
After the last crunch, EU nations decided to build big buffers each year as they walked away from Russian pipeline gas. The Iran war drove near-term prices higher and made stockpiling uneconomical. Germany and others are struggling even with loosened targets. Governments and utilities held off buying, hoping LNG flows would recover and prices would fall in time to refill before winter. That hasn’t happened. Persian Gulf supplies remain near a standstill. LNG carriers are making far fewer trips through the Strait of Hormuz than oil tankers. Prices are more than twice a year ago. If disruptions last through winter, Europe may have to pay even more to lock in scarce cargoes.
Blomberg say that few expect physical shortages, yet I am not so sure.
 Europe can still outbid others — but it is not immune to an economic hit from higher energy prices. That is the cost of replacing reliable pipeline supply with a global LNG auction while running a policy that treats oil and gas as the enemy. U.S. LNG remains the swing supply. When Europe has to pay up, those cargoes show up here first as higher prices and tighter balances. Watch TTF, JKM, and U.S. export nominations into the fall. A cold snap plus another Russian refinery hit and the fight for fuel gets very real, very fast.
In the U.S., natural gas is carving out a pretty rounding bottom that looks attractive. Front-month futures have been grinding back toward $3 after spending most of late summer stuck in the high $2s. Henry Hub spot has been holding near $2.90. That base is constructive — but the next move higher still hinges on two things that hit today: the EIA storage report and the Fox Weather outlook.
Last week’s EIA print was tight for late August: inventories rose only 15 Bcf to 3,184 Bcf as of August 21. That was well under the five-year average injection of about 33 Bcf. Stocks sat 30 Bcf below last year and 167 Bcf above the five-year average. The last two reports added just 31 Bcf combined — the tightest stretch of the peak summer season.
Today’s number (10:30 a.m. ET) covers the week ended August 28. The Wall Street Journal survey is looking for a +29 Bcf build (range 21–39 Bcf). The five-year average for that week is 37 Bcf. A print near the survey would take working gas to roughly 3,213 Bcf, trim the surplus versus the five-year average to about 159 Bcf, and widen the deficit versus last year to around 51 Bcf. A smaller-than-expected injection keeps the rounding-bottom story alive. A fat build would remind the market that production is still running hot and shoulder-season demand is starting to fade.
Weather is the other swing factor. Models are split. The GFS is hanging onto late-season heat and extra cooling degree days — the kind of outlook that kept power burn firm and helped futures poke toward a four-week high. The ECMWF is cooler, with fewer CDDs and a hint of early heating demand that isn’t enough to replace lost air-conditioning load. That’s classic shoulder-season risk: one model extends summer, the other starts to turn the page toward fall. LNG feedgas has been helpful as Freeport and other plants come back from maintenance, but record-ish production remains the ceiling until weather or storage surprises.
So the technical picture is friendlier than it was a month ago. The fundamental picture is still a tug-of-war between a modestly tighter storage path and a market that knows winter inventories are still projected to finish October near record levels. Today’s EIA print and the next few Fox Weather model runs decide whether this rounding bottom gets bought or gets sold.
Stay on top of the weather that moves this market. Download the Fox Weather App so you catch the demand-shifting updates as they hit. And stay with Fox Business for the live EIA reaction and the rest of the energy tape.
Want the full daily Energy Report and my special notes? Sign up for my special reports. Follow me on X at @EnergyPhilFlynn. Call 888-264-5665 or email pflynn@pricegroup.com. You can open an account and trade this market with us.

Thanks,

Phil Flynn

Senior Market Analyst & Author of The Energy Report

Contributor to FOX Business Network

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