OPEC and Washington are robbing rural America at the pump.
I filled up the truck this morning at the Co-op in Friendship, and the numbers on the pump felt like a gut punch. Diesel had climbed enough to sting — high enough that the total for the tank, the tank that runs the shop and tows the trailer to the deer stand, was just under what I used to net in a week. This isn’t a market story. This is extraction.
The energy roundup on Wall Street this morning tells the same story in trader-speak. Brent crude touched $90 a barrel again. WTI was over $85. The analysts at Macquarie were busy upgrading Ampol because its refinery in Lytton is “capturing this industry upcycle,” and OMV in Austria beat expectations because its refining margins are fat. The market, evidently, is “manageable.” Manageable for the people who move the tankers and trade the paper, that is.
The real engine here isn’t the supply-and-demand of crude; it’s the supply-and-demand of fear. The Strait of Hormuz is under fire after Iran resumed attacks on shipping, and the U.S. hit back — as expected, as the roundup noted, and as the administration has been trying to manage for months — a pattern the record tracked closely. Now the Navy is trading strikes with Iranian proxies, nobody has a plan to reopen the waterway, and Saudi exports through the Red Sea are now risky. Two supply arteries choked at once. The “signal” from OPEC+ that it might add close to 200,000 barrels a day on Sunday is beside the point. The optimists will point to Sunday’s OPEC+ meeting and say relief is coming — but 200,000 barrels mean little when the Strait is a shooting gallery and half the cartel is already pumping under quota. As one trading head put it, quotas and actual barrels that make it to market are two different things.
The oil patch is already pumping under its targets. The headline doesn’t mean much. The real story is that a handful of capitals and a cartel have decided the price of keeping the global order — or their version of it — is a toll that gets collected at every diesel pump in Adams County. WTI rose 2.2 percent Thursday to $85.42 a barrel. Brent climbed 1.5 percent to $90.36 ahead of the September contract’s expiry. Diesel is rising faster than crude, because refinery margins are tight and crude supply is thinning. Scott Shelton of TP ICAP said it plainly: “We are back to a very small amount of crude versus what is needed.” An administration that promised to “drill baby drill” now presides over oil priced for geopolitical instability its own confrontation helped produce.
The crisis did not grow out of the stated objective of dismantling Iran’s nuclear program. It grew out of a waterway chokepoint Washington does not control. There is no plan to reopen the waterway.
I keep a notebook for the lake ice and the rut. Lately I’ve been writing down the diesel price too. It tells the same kind of story about a world I didn’t make but have to live in. The diesel that runs my John Deere, the propane that dries the corn, the freight that hauls the milk — all of it just got more expensive, and none of it was because of anything I did. Meanwhile, the bankers and the oil majors and the trading desks are having a very good war. Analysts have been tracking it: Macquarie lifted its price target on Ampol by 3% because the conflict is boosting refining margins. The in-house trading platform at that Australian refinery is “contributing materially to earnings.” That’s the language they use when they mean “we are making a killing off the dead and the displaced.”
The Strategic Petroleum Reserve is half empty. At 413 million barrels, it covers roughly 20 days of national consumption — less if you live anywhere that heating oil, diesel, and propane move by truck instead of pipeline. That is the payback mechanism at work. An administration that promised to restore American energy strength has left rural America as the shock absorber. The reserve that existed to protect households and small businesses from exactly this kind of supply disruption is now too depleted to matter much if it is needed. There is no safety net.
The nationalist shell game is the frame. The rhetoric of strength and self-sufficiency. The reality of policies that transfer cost onto working people and extract benefit elsewhere. Oil at $85 a barrel is not an abstraction in Adams County, Wisconsin. It is what the diesel costs at the co-op, what the propane costs for the tank behind the shop, what the freight costs to move parts from Wausau.
The politicians in Washington and Riyadh are playing chess with tankers, and the working people who move the country are the pieces. The bill always lands here, at the Co-op on Highway 13, and nobody in the boardroom bothers to read it.