Tuesday, September 1, 2026

Western Australia’s Mount Ridley Mines’ Grass Patch Prospect Holds World’s Largest Publicly Reported Scandium Resource: Gallium and Heavy Rare Earths Add to the Resource: Its Selectro Processing Tech is Key


     Western Australian mining company Mount Ridley Mines recently re-assayed its drilling results across its Grass Patch Prospect acreage. According to Penny Taylor of the West Australian:

Rather than launch an expensive drilling blitz, the company effectively mined its existing data. Phase one of its 2026 re-assay program sent 3271 stored pulp samples from historical aircore and diamond drilling back to the laboratory, revealing broad, near-surface scandium beyond previous resource boundaries.”

With those assays folded into the update, Block 1 now stands at 367.45Mt at 50.3ppm scandium for 18,475t of metal. Further north along the same geological corridor, the larger Block 2 contributes 578.63Mt at 49.9ppm for 28,882t.”

Together, the separately modelled areas cover about 44.5 square kilometres and make up the 946Mt resource.”

     That total makes it the world’s largest publicly reported scandium resource. There's more:

“…the two areas also host 122.5Mt of heavy rare earths resources and 536.2Mt of gallium resources. The wider project’s gallium inventory stands at 838.7Mt.”







     The company hopes to cut capital and operating costs by simplifying material handling and implementing shared processing for the different mineral ores. All three minerals- scandium, gallium, and the rare earth elements have the potential to decrease reliance on China for them.

     The company is currently re-assaying across Grass Patch to chase extensions.

Density testing is underway to support potential upgrades into higher-confidence resource categories.”

Flotation test work will assess whether valuable minerals can be concentrated before leaching, after TIMA analysis identified rare earth-bearing phosphate minerals that could respond well to flotation. Engineering firms are also discussing a scoping study to help design and cost a demonstration plant to test the process at a larger scale.”










     They are testing recovery rates with processing with its minerals processing method known as Selectro and evaluating the economics of commercialization. They may also license Selectro technology to third parties.

     The Grass Patch prospect is 25km northeast of Esperance, with a nearby deep-water port, road, and power infrastructure providing an advantage over more remote critical minerals projects.

     Scandium is used in lightweight aluminum alloys for aerospace and defense, as well as in solid oxide fuel cells. It is a critical mineral in high demand, and new supplies from a friendly country would be very welcome in the U.S.

Testing of a composite compiled from historical Grass Patch drill samples achieved 77-83% recovery of heavy rare earths and 70-77% recovery of light rare earths while managing to recover a robust 56% of the gallium, which compares with hydrochloric (HCL) acid leaching failing to recover any gallium.”

The process also achieved scandium recovery of 80%, which is significantly higher than results from a baseline hydrochloric acid test and a significant result given the Grass Patch Complex is one of the largest resources globally.”

     The excellent test results of the processing method and the fact that it can process all three sets of ores simultaneously is a big boon for the project.



     Selectro is Mount Ridley Mines’ proprietary hydrometallurgical leaching technology developed to recover multiple critical minerals through a single process. It was developed to achieve high metal recoveries using lower-cost reagents, while incorporating reagent recycling through a closed-loop processing system. As all three graphs below show, the testing indicates much higher mineral recovery rates than with hydrochloric acid (HCl) leaching for all four mineral streams (scandium, gallium, heavy REEs, and light REEs).









References:

 

Mount Ridley grabs global scandium crown with 946Mt WA resource. Penny Taylor. The West Australian. 26 August 2026. Mount Ridley grabs global scandium crown with 946Mt WA resource | The West Australian

Mount Ridley Project. Mount Ridley Mines. Website. Mount Ridley Project - Mount Ridley

Mount Ridley’s proprietary Selectro process more than doubles REE recoveries. The Australian. August 12, 2026. MRD doubles Grass Patch recoveries with proprietary tech | The Australian

 

Debasement Trade: What is it? The Narrative, the Risks, and Its Relation to Budget Deficits and Commodities


     Treasury Secretary Scott Bessent’s recent move on U.S. Treasury bonds got me thinking about this. According to the Tax Project Team in an October 2025 post:

The “Debasement Trade” is a prominent investment strategy in current finance, defined by the systematic movement of capital out of assets denominated by sovereign promises, such as fiat currencies and traditional fixed-income securities, and into assets characterized by verifiable, finite supply, often referred to as “hard assets.” This strategy is fundamentally a defensive measure, designed to preserve the real value of wealth against the risk of the currency’s diminishing purchasing power, which results from accelerating national debt and large/rapid monetary expansion. The shift reflects a growing, fundamental loss of confidence in the long-term fiscal solvency of major economies, especially the United States, whose currency serves as the global reserve.”

     That last sentence is a bit unsettling. Is our huge national debt weakening our economy? I really don’t know, as it is not my area of expertise.

     The article notes that currency debasement has been used as a sovereign tool at least since the Roman Empire, when they reduced the amount of silver in silver coins, allowing them to produce more currency with the same amount of silver.

     In 1971, then-President Nixon stopped allowing the conversion of U.S. dollars directly into gold. This changed things.

The erosion of a currency’s value is now primarily a function of excessive issuance relative to underlying economic productivity.”

     Below is a graph of U.S. money supply, which continues to grow as the economy does. Population is not growing as fast. Inflation continues to grow as it always does, but currently and in recent years, at a rate higher than most of us would like.



     The article notes that the U.S. national debt, currently at $40 trillion, leaves us with three choices to deal with it: cut spending, increase taxes, or devalue currency. The Trump administration has clearly preferred the latter. In general, nobody likes the other two choices. Currency depreciation and reserve diversification (relying more on other currencies besides the dollar) are results of the predicament.






     Quantitative Easing (QE) happened during the 2008 financial crisis and more during COVID.

{It} involves the central bank (the Federal Reserve) creating new electronic money to purchase vast amounts of government and mortgage bonds. This injects large amounts of money (hyper-liquidity) into the financial system.

     Inflation manifests as currency debasement since it erodes the purchasing power of the dollar. It is often seen effectively as a tax on everyone.




     Some, including the Trump administration, believe that the dollar as the world’s reserve currency is subject to being overvalued and that:

“…managing a controlled depreciation of the dollar is a necessary measure to correct global trade imbalances and support domestic manufacturing.”

     “Hard assets” like gold, silver, and bitcoin are a hedge against debasement effects such as inflation, as are other investments like real estate.




     The article closes with the following summary:

The Debasement Trade is more than a momentary market tactic; it is a structural investment shift reflecting deep seated concerns over fiscal integrity of the world’s leading economies. Driven by high and persistent debt accumulation, coupled with the unconstrained power of central banks to expand the money supply through QE, the trade represents a fundamental shift in investor trust, from faith in government promises to reliance on the verifiable scarcity of hard assets. As long as the structural imbalance between monetary creation and productive capacity persists, the strategic movement toward assets like gold and Bitcoin will continue to be a defining feature of the global financial landscape.”

     An April 2026 Charles Schwab article notes that debasement trade has been growing in popularity as a financial strategy. The article notes:

“…modern currency debasement is driven primarily by excessive government debts, unconstrained "money printing," and a loss of confidence in fiat currencies as well as the institutions that back them. Some investors fear this modern form of currency debasement will lead to inflation and a steady loss of purchasing power, as it has historically. Others argue it may exacerbate wealth inequality.”

     The article suggests that the current debasement trade may result in different outcomes than the inflation it has historically resulted in. The example given is that if low or even negative interest rates are artificially induced, then financial assets could rise faster than wages or savings. Others argue that new technologies like AI can tame inflation to the point where it also leads to more wealth inequality. Well, I could agree with that as long as those on the bottom are not going further down and hopefully up. Others believe that debasing the dollar can lead to seeking out other currencies (de-dollarization), but realistically the dollar is still king. As can be seen below, the dollar has declined, but no other currency comes near it. The prevalence of the dollar also gives the U.S. economic system advantages over other economies, such as the ability to borrow money at lower rates.




     According to Collin Martin, head of fixed income research and strategy at the Schwab Center for Financial Research (SCFR):

"For better or for worse, we have a ton of debt, and that means we have plenty of bonds for investors to buy if they want safe and liquid assets. Our path of fiscal policy seems unsustainable, but it hasn't mattered yet—yet being the key word. At some point, our fiscal situation could scare away potential buyers, but that day is not today."

     The independence of the Federal Reserve has been questioned in light of Trump’s remarks about possibly artificially (without indicators pointing to a need) lowering interest rates. Others, including Janet Yellen, suggested that could lead to sharp inflation. It does not seem likely to happen with Kevin Warsh heading the Fed since he has long been an advocate of raising interest rates to counter inflation.

     The article also points out that the current interest in debasement is largely narrative-driven. Potential effects of debasement on bond markets are explored:

Bond markets could also provide a reality check of sorts. The debasement trade is supported by the belief that high government debt levels will force central banks to keep real yields low, since governments need low rates and inflation (according to some) to reduce their debt burdens. If "bond vigilantes" aggressively sell government bonds and force yields higher in a form of market-based protest against unsustainable fiscal and monetary policies, it could lead real yields to rise. This could potentially strengthen the dollar, challenging the debasement narrative.”

     It can be a bit hard to lose sight of the fact that investment is basically betting on markets. In a way, so too is currency manipulation. One would be betting on a certain result, but other results are possible as well. One obvious risk is that those hard currencies and stores like bitcoin lose value (bitcoin is notoriously volatile). Another is that economic growth strengthens the dollar. AI may be poised to increase demand and economic growth. That might help the deficit and reduce inflation, but it still strengthens the dollar. The article finishes with the following summary and warning:

The debasement trade has become increasingly popular in recent years, primarily due to fears that massive government debts and inflationary monetary policies will erode the purchasing power of fiat currencies. Investors have sought to hedge against currency devaluation by investing in hard or uncorrelated assets like gold, bitcoin, or real estate. However, it's important to remember that narratives can quickly shift, and even when they don't, crowded trades can be fragile and volatile.”

     According to an article in Benzinga, commodity expert Jeffrey Currie says markets are entering a debasement trade driven by the collision between physical scarcity and financial intervention.

Scarcity in the physical world. Repression in the financial one. Scarcity pushes prices up. Repression holds yields down. The gap between them is the debasement."

     After Treasury yields briefly reached their highest since 2007, Bessent said the Treasury would at least double its long-term bond buybacks to $4 billion next quarter. The article says Bessent is introducing demand into an oversupplied bond market.

When commodity prices rise, investors demand higher yields to compensate for the risk of losing purchasing power.”

Higher borrowing costs then weaken demand, helping cool the economy and eventually commodity prices.”

     Currie, an expert on oil markets, notes that it is the large diesel crack spread, the difference between crude oil prices and diesel prices, that is the real concern. Crude oil is sold to refineries, but diesel and gasoline are sold to consumers. They matter a lot for increasing inflation. He points out that crude prices have not changed much, but the high cost of diesel and gasoline has risen. Refiners and those who invest in them are making a killing currently.

That would create an unusual inflation signal: scarcity appearing downstream even before crude itself begins to rally.”

And if refining capacity eventually recovers, Currie sees another risk.”

Refiners would return to the market to buy crude, potentially shifting the shortage upstream and pushing crude prices higher.”

In either case, the economy could face a similar problem: higher energy costs.”

     What is Currie’s bet?

It is a bet that scarcity is becoming structural while financial intervention is making the normal market response less powerful.”

If he is right, investors may have to stop thinking of commodities as a cyclical trade and start viewing them as protection against a widening gap between physical prices and financial repression.”

     His advice is “Get long and buckle up.”

     Bessent’s moves led to Bitcoin gaining 23% in a week as stocks fell. His boss is big into Bitcoin, so that is good for them. This has somewhat validated investors calling Bitcoin “digital gold.” However, year-by-year, Bitcoin still behaves more like stocks than gold.

  


References:

 

Understanding the Debasement Trade: With the debasement trade's popularity growing, it's critical for investors to understand how it works, which assets it typically involves, and the key risks involved. Charles Schwab. April 15, 2026. Understanding the Debasement Trade | Charles Schwab

The 'debasement' trade is here, and commodities are sending the warning. Piero Cingari. Benzinga. August 21, 2026. The 'debasement' trade is here, and commodities are sending the warning

Scott Bessent just kicked the bitcoin debasement trade into another gear: Chart of the day. Jared Blikre. Yahoo Finance. August 23, 2026. Scott Bessent just kicked the bitcoin debasement trade into another gear: Chart of the day

Debasement Trade Explained: What you should know. Tax Project. October 10, 2025. Debasement Trade Explained: What you should know - Tax Project Institute

Monday, August 31, 2026

Tragic Glacier Collapse and Debris Flood in Nepal: Better Early Warning Systems Would Have Saved Lives: Geology, Precipitation, Climate, Loss of USAID Funding, and China’s Lack of Data Sharing Are Also Factors


     The horrific disaster in Nepal with the massive loss of life is a tragedy. It shows that we have to get better at giving early warnings for such events.




     It is true that global warming makes glacial collapses more likely, but climate change is likely not a determining factor in the floods and debris flows in the region. It is certainly a factor since permafrost helps hold the ice, rocks, and mud together, and heat impedes that ability. However, there are more proximate causes, such as frequent earthquakes that make the region very unstable, including glaciers. According to Wikipedia:

Such was the scale and speed of the flood, the leading hypothesis of geomorphologists is that the collapsed portion of an unnamed glacier fell thousands of metres and melted from the velocity and friction of the impact. The meltwater and rocks then displaced the river in the valley.”

     Glacier collapse, also known as an ice avalanche, was likely the main cause.

According to Daniel Shugar, a geologist at the University of Calgary in Canada who reviewed satellite imagery after the event, a 0.2 km2 (49-acre) piece of ice and rock broke off at about 5.2 km (3.2 mi) above sea level and fell vertically about 1.2 km (0.75 mi) to the valley below.”

     It has also been reported that two barrier lakes formed after the collapse and that there is substantial risk for those to fail, which would result in additional flooding that would also be potentially catastrophic.

Hydrologists noted that detecting and providing advance warning for such high-altitude glacier-related failures is difficult.”

     The region is tectonically active, prone to earthquakes, and features high relief or metamorphic rocks. However, no earthquakes were detected. The debris flow did, however, produce two large seismic events. The 2015 magnitude 7.8 earthquake had already destabilized the Langtang Lirung glacier, making it more prone to collapse.

     Below are screenshots from before and after the glacier collapsed.








Effective Early Warning Systems are the Key to Reducing the Loss of Life

     Not unlike early warning systems for tsunamis, early warning systems for catastrophic flooding due to glacial collapses and breaching of glacial lakes can help reduce loss of life. However, in regions like Nepal, those systems need to warn very quickly. The current early warning systems in place are more focused on the seasonal monsoon rains rather than on glacial collapses and lake breaches.

     Experts and officials from China and Nepal met three months ago in Kathmandu to discuss the potential for disasters. According to Reuters, they:

“…discussed strengthening cooperation to monitor and respond to floods, weather and glacier-related hazards, according to an agenda prepared by the Nepali side and seen by Reuters.”

“The participants called for joint risk-reduction measures, including inventories of glacial lakes and hazard mapping.”

But two Nepali officials told Reuters they did not receive as much information as they wanted from China on glacier risks and water levels after the meeting and they feared insufficient data sharing could hamper their ability to anticipate and prepare for major disasters.”

"What we actually wanted from them, and still want, is if there are early movements of glaciers and early movements around that area, we would want to know a bit early," said Sauhardra Joshi, a hydrologist at Nepal's Flood Forecasting Division, who was in the May meeting.

     Clearly, the two countries, which have unstable and easily destabilized glaciers and breachable glacial lakes on their shared border, need to have better scientific cooperation in detecting changes. Modern satellite monitoring methods such as InSAR should be employed and probably are. Both sides of the border are in danger of catastrophic flooding, so cooperation in this area is vital. In particular, Nepal has been wanting more and better cooperation with China, which has been slower to implement such cooperation. A glacial lake breach in Tibet caused a flash flood in the same area a few years ago that killed nine people.

"When the Chinese side sees a heavy precipitation forecast in the Tibet area, then they provide us that forecast and those observations," Parajuli said. But "not for avalanche and water level, landslides, extreme events."

China began sharing forecasts of heavy rain in Tibet over China's WeChat messaging app and email a month ago, Parajuli said.

     Reuters notes that China has been sharing more data recently. They warned Nepal about the monsoon rains earlier in the month and noted that flooding could occur and could trigger events like landslides and flash floods. China is currently sharing information, including monitoring data on a lake formed by debris from the flood. Effective monitoring is made difficult by the rough and remote terrain and the fact that geopolitical rivals India and China control part of the border region. The glacier that collapsed, however, was in an unmonitored area. That certainly suggests that monitoring networks should be expanded and filled in where needed.

"That's not to forgive the fact that there isn't really a well-articulated system. And there is very limited exchange between Nepal and China," said Lord, who is part of a team supporting Nepal's government on disaster and climate risk management.

"Chinese scientists have a much greater capacity, have much greater resources for monitoring than those on the Nepal side overall."

     The time between when the collapse occurred and when Nepal was notified was 26 minutes. It would be another 15 minutes, so 41 minutes in total when Nepal sent out cell phone alerts. Nepal looked for data from closer stations but noted it was offline, which suggested they were washed away. At least four monitoring stations were destroyed in the flood. Clearly, a better and faster system is needed.

Nepal's authorities will seek to work with China to conduct research and build systems to monitor avalanches and the release of water from glacial lakes — major risks for mountain communities — Parajuli said.

He said his department will propose a data-sharing agreement with China, along the lines of an arrangement that Nepal has with neighbouring India, for more frequent information on precipitation and river levels, not just high-precipitation forecasts.

Nepal will seek data every 10 minutes so that "we can warn our people, save our people," he said. "Our main target is we shouldn't miss any future disaster."

     This flood was a serious torrent. It moved much faster than previous floods, which made the seconds and minutes count more for early warning. Those seconds and minutes could have saved many lives. Past floods have taken about 14 hours to reach the flooded region, but this one, traveling near 100 miles an hour, only took about 40 minutes.

 


How Is Climate Change Related?

     Perhaps the best answer is that we really don’t know how much of a factor it was in this particular event. Certainly, global warming accelerates glacial melt. Without any detailed analysis, that is likely all one can say for certain. Another thing is certain as well. Making changes in our fossil fuel use will not do anything significant to help. It could, in time, make something more or less likely to happen, but quantifying such risks is difficult. There are complicating factors in this region. It is very active seismically, and those seismic events influence glacier collapse. Heavy rainfall can influence such events as well. Thus, climate, precipitation, and seismic events are all factors.  

     Roger Pielke Jr. wrote a piece about the event in his Honest Broker blog. He noted:

As now happens in the aftermath of every disaster, the metaphorical ambulance chasers of climate advocacy seem to dominate the discussion of why it happened and what to do in response — NPR, the New York Times, the Associated Press and many others have each spent days trying to convince us that climate change caused the disaster (or made it more likely), and that emissions reductions are the solution.”

The stampede of climate reductionism once again has us missing what matters most for saving lives in the future.”

     He cites human exposure and vulnerability as necessary elements of the disaster that we can alter to prevent such disasters in the future. He notes that population has nearly tripled in the two downstream districts affected over the past 40 years and that of the whole affected region has increased by a million people since then.




 

Pielke Jr: The U.S. Role in Monitoring

     Pielke Jr. writes about the U.S. ending its regional monitoring program involving USAID and NASA.

Until January 2025 the United States supported this type of vulnerability reduction in Nepal and across the broader region. Specifically, SERVIR-Hindu Kush Himalaya (HKH) was a joint USAID and NASA program with ICIMOD in Kathmandu, serving as a regional hub, covering Afghanistan, Bangladesh, Myanmar, Nepal and Pakistan.”

The program applied satellite Earth observation and geospatial analysis to disaster risk reduction, water resources, land cover and air quality. Its concrete outputs include Nepal’s National Land Cover Monitoring System, annual forest-fire monitoring, flood and drought risk services, collaboration with the Nepal Red Cross Society on risk communication, and a collection of more than 170 public datasets covering glaciers, land cover, disasters and vulnerability. The program described the region as acutely exposed to water-induced disasters given its fragile geology, rugged terrain and monsoon regime, and characterized inefficient risk communication as increasing risks of disasters.”

     He notes that the U.S. pulled about $321 million from such funding during the purge.

Jeremy Konyndyk, who ran the USAID response to the 2015 Nepal earthquake, wrote this week on X that DOGE keyword searches across programs included “climate” and that identified the USAID–NASA collaboration on flood prediction, early warning, disaster readiness, glacier inventories and the mapping of dangerous glacial lakes in Nepal, along with seven other Nepali disaster-risk-reduction projects.”

These “climate” programs were then targeted for termination.”

Konyndyk asks:

Could these programs have helped foresee or mitigate this week's glacial flooding catastrophe? Hard to say with an outlier event like this. But that was their purpose.”

     There are over 200 glacial lakes considered at high risk for collapse and numerous glaciers as well.

     Below is more information about monitoring and its difficulties and the necessity of cooperation.

Early warning systems using remote sensors, cameras and satellite monitoring have been piloted in Nepal, Bhutan, Pakistan and parts of China. However, coverage remains sparse, and expeditions to install or maintain sensors above 5,000 metre are logistically difficult, costly, and limited to short summer windows. Nepal’s hazard sits in a transboundary basin. The glaciers and upstream monitoring infrastructure lie partly in Chinese territory. So effective warning depends on data-sharing and coordination across the border.“

     Future monitoring will be impacted as well since monitoring stations were wiped out. Many bridges were wiped out as well. Monitoring equipment was installed on bridges considered to be safe from flooding.

The incident shows that Nepal’s flood early warning system needs to evolve beyond simply measuring water levels,” Khanal said. “It must be capable of surviving extreme floods, transmitting data rapidly, using backup sensors and issuing immediate warnings based on risk levels.”

He also stressed the need for continuous satellite monitoring of glacial lakes considered at risk of bursting.”

     He stresses that it is funding that is needed as well as expertise, and the U.S. has reduced it, putting more people in peril. 




     He concludes with a powerful and practical call for the U.S. to provide more of both:

That’s where the U.S. funding cuts matter — whether or not the funding came through any one agency or another, the United States is one of the few nations around the world with the resources to help less wealthy countries implement such systems in support of vulnerability reduction. Such efforts would not just save lives, but strengthen alliances in support of U.S. interests.”

Some might say it is not the responsibility of the United States to support disaster risk reduction in places on the other side of the planet.”

To them I’d simply respond: First, if the U.S. can contribute to the saving of thousands of lives anywhere — by investing dollars, expertise, technologies, or other resources, ideally in collaboration with other nations — that is money well spent. It is also the right thing to do.”

And second, more parochially, some 90 Americans are missing in the Nepal floods. It turns out that the world is a pretty small place and we are all connected.”

     Certainly, we should do all that we can to prevent such loss of human life.

 

    


References:

 

Before flood catastrophe, Nepal asked China for early warnings as risks mounted. Saurabh Sharma, Devjyot Ghoshal and Sarita Chaganti Singh. Reuters. August 31, 2026. Before flood catastrophe, Nepal asked China for early warnings as risks mounted

2026 Nepal Floods. Wikipedia. 2026 Nepal floods - Wikipedia

What Actually Caused the Nepal Disaster: Everyone wants to talk about climate change, the actionable causes lie elsewhere. Roger Pielke Jr. The Honest Broker. August 29, 2026. What Actually Caused the Nepal Disaster

Sunday, August 30, 2026

The Diesel Crack Spread Reveals the Fragility of Global Refining: Insights from RBN Energy’s Liz Dicken: Hormuz and Russia Are Both Contributing, and RINs and RVOs Are As Well


     As noted below, U.S. refinery capacity utilization is running high. I have also heard that more crude oil is stealthily making it through the Strait of Hormuz by sneakery and ship-to-ship transfers. The last numbers I heard were two-thirds of pre-war traffic. U.S. refineries have been delaying regular maintenance schedules a bit, but maintenance shutdowns will likely happen soon. I made the graph below from EIA data.





     Dicken notes that the diesel crack spread, the difference between diesel prices and crude oil prices, is at record highs. This is good for the bottom lines of refineries but not good news for consumers who buy diesel, and gasoline too. She notes:

According to the EIA’s Weekly Petroleum Status Report (WPSR) for the week ended August 21, distillate inventories fell for a fourth consecutive week, dropping to just above 103 MMbbl. Distillate stocks are on track for their lowest end-of-month level since April 2005, and are the lowest they have been in the month of August since 1951.”




     Thus, refined products remain in short supply despite high U.S. refinery utilization rates.

     As RBN Energy noted in a post a few days ago, which I summarized in a post here, there are two reasons: loss of transport through the Strait of Hormuz and Ukraine’s attacks on Russian refineries. In fact, they think the loss of Russian refined products is having the biggest effect on global markets.

     The situation in the Middle East is noted in the graph and quote below:

Reuters estimates that more than 20% of Middle Eastern refining capacity has been knocked offline or impaired by physical damage, while the conflict has dramatically reduced normal flows through the region. Global refinery runs fell by roughly 5.1 MMb/d year over year in Q2 2026. Middle Eastern refineries don't simply produce crude-derived products for their domestic markets. They are important suppliers of refined products to the rest of the world. And the Strait of Hormuz is typically weighted more toward diesel than other products as well. When those barrels disappear, Europe and Asia must find replacement supplies.”




     She summarizes the Russian situation below:

An estimated 700 Mb/d of Russian refining capacity was knocked out between January and May across 16 refineries, twice the number hit for the same period of 2025 and the attacks and impacts have only increased since then. In fact, estimated Russian refinery throughput dropped below 4 MMb/d in July and so far in August, equal to less than 60% of capacity, the lowest level in over 20 years.”

Net exports of gasoline, jet fuel/kerosene and diesel products by Russia plunged from 1.2 MMb/d in January to less than 100 Mb/d by July (far right of stacked bars in Figure 3 below). Russian net diesel exports (green bar segments) crashed from just above 1 MMb/d in January to 160 Mb/d in July, with net gasoline exports (red bar segments) and jet fuel/kerosene exports (blue bar segments) even dropping into negative territory (indicating Russia was a net importer of these products in those months).”




     She notes that back in March the global supply of oil and oil products was very good, which allowed the world to draw on that excess. It now has to catch up.

     Dicken also notes a third factor putting upward pressure on refined products: RVOs and RINs. I must admit I do not understand exactly how these biodiesel and renewable diesel incentives work, so I will just give her final summary:

The high cracks tell a complex story. Gulf refinery and shipping disruptions, together with the loss of Russian exports, have created a real shortage of immediately available diesel-making capacity. Strong March RVOs and a wider BOHO spread have also raised RIN costs, lifting the U.S. diesel price and the gross crack through compliance-cost pass-through.”

    

 

References:

Basket Case – The $100/bbl Diesel Crack, or How 2026 Exposed the Fragility of Global Refining. Liz Dicken. August 27, 2026. Basket Case – The $100/bbl Diesel Crack, or How 2026 Exposed the Fragility of Global Refining | RBN Energy

Saturday, August 29, 2026

Puerto Rico’s Water Service Problems: Drought, Mismanagement, Aging Infrastructure, and Lack of Investment are the Drivers


     Puerto Rico has a problem maintaining adequate water service for its citizens. Mandatory water rationing schedules have been implemented in several parts of the U.S. territory. Drought, mismanagement, aging Infrastructure, and lack of Investment are all implicated in the water shortage. Puerto Rico Gov. Jenniffer González-Colón declared a state of emergency on July 31 due to the drought. She said that it’s unknown how long the rationing measures will last. She also noted that it was unexpected. She also announced that the US Department of Agriculture approved a drought disaster declaration on the island, which allows farmers and agricultural producers in 26 municipalities to access emergency loans. Most of the island is experiencing moderate to extreme drought.

When you have a drought colliding with an aging infrastructure, that’s more than a drought. That’s a humanitarian crisis, and it’s a crisis which is deep,” said Northeastern University chemistry professor Eugene Smotkin, who lives in Old San Juan with his wife. “It’s not a drought story.”




     One of the most significant factors in Puerto Rico’s current water problems has been ruptures in its Super-aqueduct, a 72-inch pipeline that carries water along a 50-mile route along the territory’s populated northern coast area that includes the capital, San Juan. The super-aqueduct, which entered service in 2000, has a capacity of 75 million gallons of water per day.




     According to CNN:

Carlos Pesquera, a civil engineer and former secretary of transportation and head of public works who was appointed by the governor as an advisor on the water crisis, said the drought “is the immediate trigger” of the current emergency, “but it does not fully explain the vulnerability” of the water system.

Puerto Rico has aging infrastructure, significant water losses and areas where greater redundancy and resilience are needed,” Pesquera, a member of the pro-statehood governing party, told CNN via email.

     As shown below in a 2019 report by the American Society of Civil Engineers, infrastructure investment on the island has not kept pace with GDP growth.




     That 2019 report noted:

Reactive maintenance of public water systems occurs too frequently and could be avoided with better asset management programs that rehabilitate and replace infrastructure before failures occur.”

     The island generally has adequate rainfall, but seasonal droughts are common. Problems identified include sedimentation in water reservoirs. Dredging might be needed in those reservoirs. New reservoirs should be built to capture more of the island’s runoff. The report also recommended other measures, including reducing unaccounted water loss through pipe leaks and tank overflows to lower the 42% loss rate, installing emergency electric energy generators at all water pumping stations, wells, and filtration plants, and improving meters at treatment plants and wells.

     Some regions have been having water availability issues for years, and some residents note no water availability on over half of the days in a year in recent years.

The water problem in the San Juan area has been with us for years,” Rodriguez said. “Every year it gets worse. It’s draining, a constant state of worry. It is no way to live.”

     Reliance on a single piece of infrastructure, the super-aqueduct, has proved to be problematic, as CNN notes:

After more than a quarter century of service, the Superaqueduct’s recent breaks exposed a key weakness in Puerto Rico’s water system: The heavy reliance on a single, long-distance transmission line without an equivalent backup during a major interruption requires sustained attention and investment, according to Pesquera.”

The Superaqueduct was originally designed as a complimentary water source. Its purpose was to reinforce existing systems and make the metropolitan (San Juan) network stronger, not to replace traditional water sources,” he wrote in his report.

     Natural disasters, such as hurricanes, and the government’s financial problems have exacerbated the issue. The lack of water has caused hardship for many families. A citizen who collects and delivers water for those in dire need noted:

I find many older adults alone in subhuman conditions with no one to care for them,” she lamented, her voice fading.

Whenever we have water, I fill every bottle and bucket I can find. I’ve never had to live like this – not even after the worst storms,” Pica Quiñones said.

 

 

References:

 

In Puerto Rico, even when it doesn’t rain, it pours. Ray Sanchez and Isabel Rosales. CNN. August 28, 2026. Inside Puerto Rico’s worsening water emergency | CNN

Puerto Rico’s North Coast Aqueduct interconnections. Natural Hazards Mission Area 2021 (approx.). U.S. Geological Survey. Puerto Rico’s North Coast Aqueduct interconnections | U.S. Geological Survey

2019 ASCE Report Card for Puerto Rico’s Infrastructure. American Society of Civil Engineers. November 2019. 2019-Puerto-Rico-Report-Card-Final.pdf

 

 

 

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