Oil Market Disruption for Hipsters

Helping you improve your takes

Do you have a podcast? Do you live in Brooklyn? Are you part of the political left and have a vaguely tankie or tankie-adjacent views and social realist aesthetics and yet have never visited an LNG terminal or oil refinery where those buff soviet bros would probably work? This one is for you. I have been struggling with the bad oil takes coming from all quarters - not least of all the US federal government - and have been at pains to explain things simply, in terms that people understand. So, while you probably do not know much about oil refining you know know something about Negronis, so lets start there.

A Negroni is a tasty cocktail made with three ingredients and which is simple to make: gin, Campari (or Aperol, if you want something less boozy) and vermouth. An oil refinery also has three primary inputs: heavy oils, lighter oils, and natural gas. Simple enough: if you have them all available in the correct ratio you can make Negronis and if you have two or more you will probably be pretty buzzed. However - if you do not have the ingredients in the right ratios you can either make less Negronis or bad Negronis. In oil terms this might mean the kind of oil refining seen at times in Syria in the photo below, in alcohol terms this might be the kind of concoctions high school students make with their parents liquor cabinet. Either way this is not advisable, safe or good.

In addition, a Negroni can only exist at a time and place. If you have a bottle of Campari and you are in Park Slope, your friend in Red Hook has a bottle of gin, and your other friend in Manhattan has a bottle of vermouth, you do not have any Negronis until you meet up and mix the ingredients.

Currently, Europe has Campari (light oils) in adequate supply and a shortage of gin (heavy oils) and profoundly acute shortages of vermouth (gas). Their primary vermouth vendor turned out to be a violent psychopath, they aren’t buying from him anymore and due to a snowstorm they cannot get additional supply quickly. The gin (heavy oil) shortage is a bit more nuanced - it does exist but strangely the global supply of gin seems to come from places that were “cancelled” years ago (Venezuela, Iran) as well as the violent psychopath. However if they do buy from those long-cancelled suppliers, they may in turn be cancelled by the Campari supplier, the United States and perhaps the secondary Campari supplier, Saudi Arabia. This is why we have less Negronis.

To further complicate this, the bar where they might go to consume Negronis has a barman - lets call him Exxon (a parental abuse case right there). Exxon can only make so many Negronis per hour and there is now a shortage of capacity to turn ingredients into Negronis. There is another bar in Chinatown but it is very exclusive and owned by Sinopec and does not seem keen on having large numbers of people flood their bar having turned it into a more exclusive venue from a high output dive bar a few years ago. Sinopec needs to return to being a dirty Shandong themed dive bar and apparently does not want to. Who can blame them? On the other hand, where will everyone get their Negronis if Exxon is not expanding?

Those are the key contours of the oil market disruption:

• Not enough bar staff: refining shortages

• Not enough ingredients, in the right ratio, in the same place: heavy oil shortages, and acute gas shortages in Europe

• Everyone not talking to each other at times and being weird for inscrutable reasons due to long held grudges: welcome to geopolitics.