Could Spare Chinese Refinery Capacity Be Used to Process More Crude into Oil Products for Export? RBN Energy Thinks It Is Plausible

     With Trump considering a diesel export ban, his advisors, including current DOE Secretary Chris Wright and his former first-term DOE chief Dan Brouliette, have argued against it. Wright said there will be some restrictions but not a ban on exports. Commentators have suggested that the effects of an export ban were uncertain and could actually lead to higher prices rather than the lower prices desired. With diesel selling for $6.53 per gallon, there is a clear need for lower prices. Those levels are not sustainable for farmers, truckers, and others who use diesel extensively. There are no real alternatives for them.

     Jason Lindquist and John Auers of RBN Energy asked whether spare Chinese refinery capacity could help world markets. They conclude that China could buy and refine more oil into products like diesel and export more for the global market. However, they note that China needs diesel too and conjecture that there are some Communist Party policies that may make it harder to refine and export more.

     The graph below shows that diesel and other oil products are not getting through the Strait of Hormuz. It has been a trickle, 100M Bbl /day at the trough in April to about 700 M Bbl/day now,  compared to 2025 when well over 3 MM Bbl/day were moving through the strait. That is about 15-22% of pre-war volumes.

     Persian Gulf refineries produce a lot of oil products, and several of those refineries have been bombed, dropping output by an estimated 2.5 MMb/d, two-thirds caused by refinery bombing. Less delivery of crude oil to refineries in Asia from the Middle East and Russia added to that, amounting to a 5.1 MMb/d cut in global refinery output. That means, even if they could send more, it won’t really happen until the refineries are back to partial and then full operation. Refineries have been bombed in Russia as well, which has taken more oil products off the global market. Thus, two wars, both conducted for protection against rogue militant states that do not accord with international laws and do not respect human rights at all (Russia and Iran). Russian refinery output has dropped dramatically to about 60% capacity utilization, the lowest in 20 years. Meanwhile, U.S. refineries are operating at over 95% average capacity utilization. We are also exporting refinery products as much as possible. They estimate that distillate exports averaged 1.56 MMb/d, 30% above the five-year average, in the past quarter. Thus, we can’t really refine or export any more than we are right now. But China can.

      They note that China has government controls on how much oil is refined and how much oil products are exported. They explain the details below:

“Crude-import quotas are one measure China uses to maintain market control. Independent “teapot” refiners generally need government authorization to import crude, allowing Beijing to influence both the volume of crude entering the country and which refiners can access it. State-owned companies such as Sinopec, PetroChina and CNOOC are subject to fewer of these constraints but remain closely aligned with broader government priorities, particularly energy security and domestic supply.”

“Refined product exports are another powerful tool. Beijing allocates export quotas for gasoline, diesel and jet fuel, effectively determining how much surplus production can be placed into international markets. When quotas are tight, refiners have less incentive to run at high rates because their ability to export excess product is constrained. Larger export allowances can have the opposite effect, allowing refiners to capture overseas margins and supporting higher utilization.”

     As the graph below explains, Chinese refiners dropped exports to about 400Mb/d due to the Strait of Hormuz disruption but are back up to normal at about 1 MM b/d since August. They note that China could double that export output to 2MM b/d, which would increase capacity utilization from the current 80% to about 85%.

     I had wondered when I saw the article headline whether Trump and Xi talked about this issue a couple of days ago when they met, and apparently the authors wondered as well. Trump asked Zelensky to stop bombing Russian refineries but I think he has a right to do whatever is necessary to thwart a brutal invading enemy.

“China’s refining sector won’t single-handedly solve the global refined-products squeeze, but it represents one of the few meaningful potential sources of additional supply available to the market in the short term. Beijing’s control over crude imports, refinery operations and, most importantly, export quotas gives it the ability to influence how much product reaches international buyers. With Middle Eastern and Russian supply still constrained and U.S. refiners running near full tilt, even a modest increase in Chinese exports could take some pressure off global balances. The question is not whether China has the barrels, but whether Beijing decides it wants to supply them to meet global market needs. With President Trump scheduled for a state meeting with Chinese President Xi Jinping on Thursday in Washington, the topic certainly could come up. While refined product exports are unlikely to be a headline Trump-Xi negotiating item, they could be part of a broader discussion about global fuel availability and energy-market stabilization, topics of mutual interest to the U.S. and China.”

    

 

References:

 

Help! – With Refining Capacity to Spare, China Could Help Ease Global Gasoline, Diesel Crunch. Jason Lindquist and John Auers. RBN Energy. September 23, 2026. Help! – With Refining Capacity to Spare, China Could Help Ease Global Gasoline, Diesel Crunch | RBN Energy

 

Power Conversion Systems Aid Electrification, Digital Optimization, and Manage Energy Storage Applications

     According to an AI overview from Microsoft Copilot:

“Power Conversion Systems (PCS) are critical technologies that convert and regulate electrical energy between AC and DC forms, enabling efficient energy storage, grid integration, and renewable energy management.”

     The summary from Microsoft Copilot is given below:

     Power conversion systems are essential for EVs, solar power, wind power, and grid battery storage. Solarbridge notes that trends are moving from centralized power to decentralized power, and PCSs are a key to that change. They note:

“At its core, a Power Conversion System (PCS) is an advanced electrical device that converts electric power from one form to another to make it usable for a specific application.”

     They point out that a PCS is not merely an inverter that changes DC to AC. It manages bidirectional flow, which is required for batteries to be tapped for power when needed for grids or applications. It is the hardware that enables batteries to charge when power prices are low and discharge when they are high. A PCS also keeps voltage, frequency, and power quality stable when battery charge and discharge occur. Below, they describe the three functions of a PCS: 1) rectification (converting AC to DC), 2) inversion (converting DC to AC), and 3) power quality regulation by adjusting voltage and frequency. The last function, regulating power quality, is also known as grid-forming or grid-following. It happens in milliseconds via software-controlled switching.

     The benefits of PCSs include enabling energy arbitrage where power can be bought low and sold high for net cost savings. Grids can do this, but so too can commercial and residential customers. A PCS can provide resilience during a power outage by disconnecting from the grid, or islanding, and running needed devices with the battery system and/or solar generation system, essentially becoming a microgrid. Businesses use these setups to avoid losses during outages.

     They note that PCSs are modular and for businesses are often begun at 100kW size. Solarbridge sells PCS modules, hybrid inverters, and integrated all-in-one PCS/BESS energy storage solutions, all made in the USA. They note that there are many cheap imported PCS systems that are inadequate or mismatched to U.S. power needs. They lack support and may not meet grid codes.

     PCSs are expected to last 15-20 years. They note that they can work with most available battery chemistries. In most cases, a PCS replaces the need for a separate inverter. Earlier this month, I posted about a two-year study commencing to test different grid-forming inverter models and their ability to help stabilize the grid and reduce the need to use spinning inertia for grid balancing. Grid-forming inverters work by a different mechanism than the spinning inertia of turbines and motors.   

     Company Vicor Power makes power modules for EVs, and its modular approach allows for the same power architecture to be deployed across vehicle platforms. They design for range boost when needed, and their modules can be used to optimize power, weight, and package space. Their modules are isolated and bidirectional.

     Danfoss is another company that builds and sells PCSs, among many other power products. They offer “an extensive range of power converters and variable frequency drives for use in power systems for a wide range of applications across all industries.”

    

 

 

 

References:

 

Electrification through power conversion systems. Danfoss. Electrification through power conversion systems | Danfoss

Understanding Power Conversion Systems. Solar Bridge. Understanding Power Conversion Systems (PCS_

The most efficient way to get from high voltage to a 48V power delivery network. Vicor. Converting the high voltage xEV battery to 48V or 12V | Vicor

The Emissions Benefits of Irrigation Far Outweigh the Impacts of the Emissions They Produce, According to Study

      Agricultural greenhouse gas (GHG) emissions in the form of land use and land conversion account for nearly a quarter of global GHG emissions. A study published in Proceedings of the National Academy of Sciences (PNAS) notes that agricultural practices “drive both direct, on-farm emissions, and indirect land use change emissions through yield effects.” Specifically, the authors compare the direct emissions of irrigation to the yield increase benefits that irrigation provides in terms of spared land use, which provide indirect emissions reduction benefits.

     The study considers land sparing and avoiding the conversion of forest lands to grasslands and croplands.

“Due to land sparing, US irrigation provides an estimated gross GHG benefit of 6.86 Gt CO2e, while producing 0.019 Gt CO2e of direct emissions annually.”

     That is a huge emissions benefit, about 363 times less emissions with irrigation than would have been emitted without it.

     The researchers, from Colorado State University, simply stress that irrigation allows more crops to be grown on less land, and their study quantifies how much, and it is quite a benefit. According to Phys.org

“We’re able to show this large benefit of U.S. irrigation to greenhouse gas emissions from the food system,” said co-author Nathan Mueller, a CSU associate professor in the departments of Ecosystems Science and Sustainability and Soil and Crop Sciences.”

“Yet, when we talk about water use, particularly in the Western U.S., there are trade-offs with every use and trade-offs beyond food and beyond greenhouse gas emissions. Our work provides one piece of the puzzle to help examine some of the very complicated societal cost-benefit questions surrounding water use.”

     CSU alumnus Alex Brown’s family has been farming and ranching in Colorado’s Yuma County for 120 years on the same land. It is one of the state’s top agricultural producing counties. He notes that farmers in the area take conservation seriously.

“Irrigation is a powerful adaptation strategy,” Driscoll, the study lead, added. “It increases productivity; it increases resilience to heat and drought stress, and of course, maintaining and increasing agricultural production is a critical priority.”

“At the same time, we need to reduce food system emissions, so understanding how these two challenges interest with one another is a priority. This work allows us to grasp some of those trade-offs and synergies a little better.”

 

   

 

References:

 

Greenhouse gas benefits of agricultural irrigation far outweigh emissions costs, study finds. Jayme DeLoss, Colorado State University, edited by Sadie Harley, reviewed by Robert Egan. Phy.org. September 15, 2026. Greenhouse gas benefits of agricultural irrigation far outweigh emissions costs, study finds

Global greenhouse gas cobenefits of US irrigated agriculture. Avery W. Driscoll, Justin A. Johnson, Joey E. Blumberg, Alison E. King, Seth A. Spawn-Lee, and Nathaniel D. Muelle. PNAS. Vol. 123 | No. 39.  Global greenhouse gas cobenefits of US irrigated agriculture | PNAS

The Energy Illusion: Why Renewables Cannot Replace Oil & Gas. Justin L. Lurie. Five Lions Publishers (2026): Book Review/Summary

     I saw a free download for an advance PDF copy of this book, and it looked interesting, so I downloaded it. This is a book about energy realism, something that I strongly support and that I believe is necessary if we are to make the best choices about energy. For many years I have read authors and reporters like Jude Clemente for Forbes and Robert Bryce as they argue for realistic views about energy. In terms of me reading this book, he is “preaching to the choir.” There are many quotable energy realism sentences in this book.

     This book is very practical and gives nice explanations to show why we simply can’t replace energy-dense, reliable, and affordable energy like oil & gas, with unreliable, intermittent, and higher cost (especially if battery systems are added) energy sources like wind and solar.  

“This book makes a specific argument: Oil and gas remain central because they still carry scale, continuity, timing, and density better than alternatives in many of the world’s most demanding energy jobs. That does not mean every use is permanent. It does not mean innovation stops. It does not mean no system changes. It means only that modern life is organized around performance standards that remain unforgiving, and hydrocarbons still meet many of those standards more effectively than the public conversation often admits.”

     A key idea of Chapter 2 – Addition is Not Replacement, is that the cost of useful energy is greater than the cost of the production of that energy alone. The data show that there has only been addition, not replacement.

“Aramco’s Amin Nasser stated the broader scale issue bluntly at the 2025 Energy Intelligence Forum: “Over the past decade, global primary energy demand has risen by the equivalent of around 40 million barrels of oil per day. Hydrocarbons supplied two-thirds of that growth, despite 11 trillion dollars being spent on transition.” That is a useful counterweight to the assumption that renewable growth alone proves replacement. It shows the same layering dynamic from another angle: large spending on transition technologies has occurred alongside continued growth in the hydrocarbon system because the total load has kept expanding.”

     Lurie notes that it is not just production that matters, but deliverability as well. We are experiencing that now, with the loss of energy being delivered from both the Middle East and Russia at the same time, which has been stressing markets. He notes that in order for a renewable energy source to actually replace dispatchable energy sources:

“It must reach customers through real infrastructure. It must finance not only generation, but also grids, storage, backup, maintenance, and delivery. It must work through seasons, disruptions, price spikes, and growth.”

“The central mistake in much of the energy debate is therefore not optimism about new technologies. Optimism is necessary. The mistake is confusing growth with displacement.”

     He notes that energy trading is often considered to be separate from producing and delivering energy, but he argues that it is a necessary part of the puzzle to get energy here it is needed at a fair price. Traded prices often expose constraints such as inadequate pipeline capacity or high crack spreads that expose scarcity of refined products. Energy trading systems connect supply to demand. He says that energy trading is closely linked to logistics, financing, and physical delivery. Electricity, he notes, is less tradable than oil and gas:

“Electricity is tradable, but it is not tradable like oil or LNG. It must move through wires in real time, constrained by transmission capacity, congestion, balancing needs, and storage duration. When transmission is missing, generation cannot simply be placed on a ship and sent elsewhere. When output arrives at the wrong hour, storage or backup must cover the gap. That does not make renewable power unimportant. It means the trading architecture is less flexible than the global oil and gas system unless grids, storage, interconnection, and dispatch tools are expanded in parallel.”

     Chapter 3 explores ‘Industrialization in Emerging Markets.’ He notes that at the beginning of growth, it emerges physically, as, for instance, the movement of freight. Freight is seen as essential.

“A corridor is not just a road or a rail line. It is a timed system. Its value lies in whether trucks clear it reliably, whether customs and handling are predictable enough to preserve schedules, and whether the fuel needed to move across it is available at tolerable cost.”

     Diesel and jet fuel are the fuels that predominantly move freight and that is likely to continue as electrifying these sectors has proven to be difficult. Corridors allow freight to move more quickly and at less cost. When they are disrupted, as in the Persian Gulf, currently, the implications cqn be dire. He does note that electrification of the heavy-duty transport sector is happening at a small scale, especially in China.

     Industrial heat, or process heat, is another area where fossil fuels reign because they often require temperatures that only burning fossil fuels can provide. Electric arc furnaces can take on some of these tasks at a higher cost, but the sector is not likely to electrify to a significant degree anytime soon. He considers refineries:

“A refinery is not simply a fuel producer. It is an example of controlled industrial heat translated into saleable molecules at scale. Distillation, conversion, hydrotreating, and petrochemical integration all depend on stability, timing, maintenance discipline, and dependable throughput. That is what industrial depth looks like.”

     Petrochemicals are the result of using fuels as feedstocks for materials. Industrial societies require materials. Refineries keep those needed materials in production and make supply of those materials reliable. He stresses that hydrocarbons are not simply fuel but materials as well:

“Packaging, coatings, fibers, solvents, films, detergents, pipes, medical components, and countless industrial inputs carry hydrocarbons inside the value chain.”

     He also stresses that reliability and predictability support growth while price volatility impedes it.

“Growth is physical before it is statistical. It happens where goods move, heat holds, feedstocks arrive, and finance can finally see far enough ahead to trust the next step. Dense energy matters not because it is ideologically preferred, but because it remains one of the surest ways to widen what an economy can practically do.”

     Chapter 4 is about energy security. He notes that energy insecurity often leads to price volatility and volatility can be more damaging than a single high price. Price volatility impedes planning and price stability aids planning. Uncertainty about cost can be worse than the cost itself. He stresses the importance of spare capacity, as OPEC utilizes it. It may seem inefficient, but it allows the market to respond quickly to disruptions. The same is true of gas storage.

“Time matters in energy security because rerouting is never instantaneous. Cargoes do not teleport. Tankers queue. Regas slots are limited. Pipelines cannot reverse themselves without engineering. Refineries cannot instantly run any crude in any configuration. Storage cannot be filled after the emergency has already arrived. Security depends on how much room an economy has between the first disturbance and the moment when somebody must start curtailing, bidding aggressively, or shutting down. Buffers are the difference between absorbing that interval and being ruled by it.”

     He notes that it is not the feedstock, crude oil, that is critical to daily life, but the refined products people use. This is borne out in the current shortage of these products and their inflated prices due to disruptions in the Middle East and Russia. Diesel is a global workhorse, and disruptions of its supply, which we are currently experiencing due to upheavals in the Middle East and Russia are showing our vulnerability in terms of higher prices for consumers and businesses. As we all well know, when fuel prices rise, the price of everything else also rises. Thus, disruption in diesel supply undermines energy security, especially for net importers. Storage and spare capacity can be seen as optionality. He states that energy security has a market price. Reliable supply also has security benefits through trade balances and industrial competitiveness.

“Reliable energy allows a country to attract industry, run ports, support manufacturing, expand chemicals, operate data centers, move exports, stabilize utilities, and keep capital confident. In a competitive world, reliability itself becomes a form of industrial policy. The country that can promise energy availability at scale has an advantage over the country that can only promise ambition.”

     Import dependence is a vulnerability. Wealth also matters. High income countries that export have the most advantages, including optionality and the ability to handle volatility. He notes that the practical meaning of energy security is the ability to keep normal economic life functioning under stress.

     Getting back to the renewables replacing hydrocarbons myth, he notes that even though spending on renewables is beginning to exceed spending on hydrocarbons, investment in hydrocarbons, including coal, in 2025 is projected at $1.1 trillion. And that amount goes a lot farther with hydrocarbons in terms of reliable energy, specialist energy such as for industrial process heat, and for electricity with much higher utilization rates than renewables can achieve.

     He praises AI and automation for its role in optimization, reducing down time, ensuring precision, enabling faster decision-making, and for predictive maintenance, all of which help the entire system function better. He covers operational efficiency and optimization in the upstream, midstream, and downstream sectors. Predictive maintenance is especially valuable in the refining sector, where small issues can be costly.

“A refinery is not just a machine. It is a schedule. Once that schedule breaks, value leaks out in every direction. Feed plans are disturbed. Offsites lurch. Operators stop optimizing and start stabilizing. Product balances tighten. That is why refinery utilization and refining performance appear repeatedly in company disclosures: the commercial value is not only in the asset, but in keeping the asset inside its planned rhythm.”

“…the value of digital systems lies in their ability to reduce operating chaos.”

“…the operating edge is procedural before it is digital. The software matters. But the chain of command, the thresholds, the restart logic, and the work sequence matter first.”

     Chapter 6: Access Before Transition, explores energy access and energy poverty, emphasizing that mere connection is not service.

     He cites the 2025 Sustainable Development Goal 7 (SDG7) tracking report, which estimates that 666 million people still lacked basic electricity access in 2023, while 2.1 billion people still relied on polluting fuels and technologies for cooking. Sub-Saharan Africa, where power grids and utilities are weak and poverty rates are high, is a major region that is lacking. It is also a place where, as I have pointed out elsewhere, the youth population is rising.  Simply connecting to energy is not enough, there needs to be reliable energy service that is adequate to meet modern needs. That is why a few hours of power or powering lights with a solar panel and small battery is not enough.

“African Development Bank analysis points to the same pattern: brittle feeders, overloaded transformers, poor collection, and high service cost per connection recur as barriers. When utilities serve long lines badly, losses rise, bills go unpaid, and maintenance slips further. Service worsens. Customers hedge with generators, batteries, charcoal, kerosene, and whatever else keeps the household functioning. The system becomes more expensive to run and less able to earn its way out of fragility.”

     The region needs adequate power supply and service that people are willing to pay for. It needs to be adequately financed.

“Lenders and concessional funders will not keep supporting a system that cannot distinguish between technical loss, commercial loss, and honest low-income demand. Reliability, collections, and creditworthiness do not move in sequence. They move together, or they fail together.”

     Many businesses, schools, and clinics in these countries with unreliable grid power, also must rely on diesel generators for backup. One study found that 15% of power-sector NOx emissions in Sub-Saharan Africa come from backup diesel generators. Power theft and meter tampering are also common in these areas of weak grids. People don’t want to pay for power that is not reliable and collection rates for power bills remain low. Those people must buy generator fuel as well.

     Clean cooking fuels are another huge challenge in Sub-Saharan Africa and Southeast Asia. Where power is available and reliable, electricity can be used. LP gas is the cleanest of the fuels when the others are wood, charcoal, and kerosene. Even where LP gas is available, those other more polluting fuels are used as well. Women and children, as a result, suffer lung diseases and other health problems. Having an LP gas stove requires having a reliable supply of LP gas, usually a tank refill, which is not always the case.

“Energy poverty is often a matter of insecure substitution rather than absolute absence.”

“The energy challenge for the unserved and underserved is not solved by announcing a future portfolio. It is solved by making the next hour more dependable than the last. People live inside kilowatt-hours and reliable refills, not megawatt announcements. Access that does not hold is not access yet.”

     Chapter 7 considers future growth opportunities in the oil & gas sector, including LNG continuing to replace coal. Lurie notes that gas is where demand and infrastructure still reinforce each other most visibly. He notes the big spending in LNG infrastructure in recent years. He stresses that LNG deals rely on commitments from buyers, which push them to FIDs.

“The wrong way to read the future is as a referendum on the whole sector. The better way is to ask which segments combine durable demand, scalable infrastructure, and operating discipline. Those are the segments where schedules can still be trusted long enough for capital to work.”

     Another opportunity for LNG, offshore wind, hydrogen, and CCUS projects is reusing existing offshore tiebacks to accelerate project timelines and decrease project costs.

“Projects that can reuse hosts, subsea lines, export routes, and service ecosystems typically deliver greater calendar certainty than projects that must build every layer of infrastructure from scratch.”

     He also cites the repeatability and continued improvements of shale plays. Thus, shale plays will continue to be good opportunities for oil & gas. To summarize: offshore tech can benefit via reuse and shale can continue to benefit via repeatability.

     He presents downstream upgrades as an opportunity and cites growing refinery capacity utilization as proof. Refineries continue to be profitable, and now especially so as their products are in unprecedented demand compared to current choked supply. Refining margins were expected to be fairly flat before the current geopolitical events made them skyrocket.

     He stresses that timing of often the key to monetizing growth:

“Growth becomes cash only when capacity arrives on time, runs steadily, and reaches customers inside a system that can actually absorb it.”

     Lurie states that future growth should be ranked rather than narrated.

     Chapter 8 explores refining, refined products, and pricing. We have all had a lesson in this in recent months, though it happened just after this book was finished. It really exemplifies the importance of timing, reliable supply, and reliable delivery. He stresses the importnac  eof geography in refining projections:

“IEA projects 4.2 million barrels per day of new or expanded refining capacity through 2030, partly offset by 1.6 million barrels per day of announced closures. That is the shape of the market: new capacity is being added, but not everywhere, not equally, and not always close to the demand centers that feel product tightness first. Geography has become part of the price.”

     The current high fuel prices suck, whether we agree with the Iran war or not, and whether we agree that Ukraine should bomb Russian refineries or not. I wonder how the seasonal maintenance shutdowns will affect prices going into winter if these issues are not resolved. He notes optionality for refineries and crude buyers where in times of low demand more crude can be diverted to crude-to-chemicals and back to crude-to-fuels when demand is high. He notes, however, that the optionality is limited.  

     Next, he considers hydrogen, which is vital for refineries where it is used in hydrocracking and hydrotreating, including hydrodesulfurization. Desulfurization requirements use energy and are cost to run. Refineries need a reliable supply of hydrogen at low cost to best meet requirements and keep their own product costs low. Hydrogen constraints can impede capacity utilization.

     He notes the rising crack spread in April 2026, so the book’s timing is at least to then.

“The market is also telling you what it values. Jet and diesel remain central to the margin story because middle-distillate cracks are often where product tightness becomes most visible. Hydrocracker reliability, FCC uptime, hydrogen availability, and maintenance timing are not background engineering details. They are part of the price-formation system.”

     The whole system sets the product prices, not just the cost of the crude feedstock.

     The final chapter is self-explanatory: Reliability is Designed. Reliability involves a chain of decisions.

“That has been the thread running through this book. Chapter 3 showed that growth concentrates where freight, heat, and materials can be trusted. Chapter 4 showed that energy security is an economic condition before it is a geopolitical slogan. Chapter 5 showed that the operating edge is procedural before it is digital. Chapter 6 showed that access means dependable hours, not nominal connection. Chapter 8 showed that prices are increasingly written through the reliability of complex conversion systems rather than through crude abundance alone. Chapter 9 gathers those threads into one conclusion: prosperity depends less on declarations than on systems designed to work under stress.”

     He cites the reliability of supply in the form of available U.S. lease sales in the Gulf. He also sites the reliability of environmental law, or what has become known as regulatory certainty, noting that it doesn’t have to be perfect, but needs to be certain enough to attract capital and not delay decision making. He cites the industrial approach of Chevron in the Permian Basin where they operate according to a long-term plan, which ensures steadiness and reliability of production. They don’t respond to prices as much as companies that are more focused on short-term plans. Procurement, interconnection, and delivery contracts are all important for ensuring reliability. Functional port operations are vital for reliability. Permitting timelines can aid or impede reliability.

     He cites improved leak detection systems and faster leak response times as another technology that improves reliability and can reduce downtime. Disruption mitigation is key to successful operational optimization. He stresses the importance of adequate investment to reliability:

“Underinvestment and logistics constraints do not have to be the only cause of instability to matter; they become dangerous because they reduce the system’s ability to absorb the shocks that commodity markets already face. Clearing backlogs is not just an engineering task. It is a stability policy.”

“That is the logic this book has been assembling chapter by chapter. Industrial growth depends on systems that move freight and hold heat. Security depends on supply that can be planned around. Operations depend on routines that keep small problems small. Access depends on reliable hours, not ceremonial connections. Prices are written by products and the systems that keep them flowing. The final lesson now comes into view: all of those truths are really about design.”

“…major operators still understand continuity, firm service, and dense fuels as governing variables in the real system.”

“Reliability is what turns energy from a commodity into a civilization-scale service.”

     Energy abundance supports reliability by being available, accessible, and deliverable. He offers one last quip for reliability remaining to be the future of energy, noting we must be honest and realistic about our energy systems:

“The task ahead is not to defend the past. It is to build a reliable future. That future will include new technologies, cleaner processes, better monitoring, lower emissions intensity, stronger grids, more efficient operations, and broader access to modern energy. But it must also include the fuels and infrastructure that continue to carry the heaviest burdens of the real economy.”

     This was a great book, emphasizing the importance of energy realism, operational optimization, effective disruption mitigation, optionality, and reliability, in our energy systems. There are many quotable sections which I include. As someone who has favored energy realism for a long time, I am quite familiar to many of the book’s arguments, so he is “preaching to the choir” here. The book did not offer me that much that was new to me, but others not so well informed should read it.

 

EIA: Public Companies Comprise Just 2% of Total U.S. Oil & Gas Companies, but Are Responsible for 68% of Total U.S. Oil & Gas Production

 

     I have had the opportunity to work for both public and private oil & gas companies in the Appalachian region, where, according to this analysis, 80% of oil and 85% of natural gas are produced by public companies, but they only make up 1% of total companies. I have also done consulting work for a private company drilling the Haynesville Shale in Louisiana and Texas, where private companies produce 55% of the natural gas.

     As the title of the post notes, 68% of U.S. oil & gas is produced by publicly traded companies, but they only make up 2% of the total oil & gas producing companies. Private companies include companies funded by private equity and small operating companies that produce a lot of low-profit-margin wells with small amounts of production, aka. stripper wells.

     EIA notes that there are about 12,000 oil & gas producing companies in the U.S. and 2%, or roughly 240 companies, are public companies.

“Massive scale, prime drilling locations, and advanced technologies help publicly traded oil and gas producers maintain their edge on production. Publicly traded companies generally report lower breakeven prices—the minimum price needed to cover operating costs—than privately held companies. These lower breakeven prices are driven in part by higher-quality acreage holdings that yield higher volumes of oil and gas. The immense size of the public producers also gives them economies of scale that lower the cost of production.”

“The 12 firms with the most wells make up less than 1% of the companies, but they each operate from 10,000 to over 50,000 wells, producing an average of 39,000 barrels of oil equivalent per day per well. In contrast, 64% of all operators have 10 or fewer wells, which are nearly all stripper wells, producing less than 15 barrels of oil equivalent per day.”

     The Appalachian and Permian regions are where private companies have the highest share of companies and the lowest share of production. As I suggested above, the Haynesville is the only region where private companies produce more than public companies; in this case, it is about 99% natural gas.  

“In the Haynesville, production is concentrated among the largest private producers. The top five private natural gas operators alone produced 38%, or 5.8 billion cubic feet per day, of the region's natural gas output.”

     

 

References:

 

Public companies produce most U.S. crude oil and natural gas. Energy Information Administration. September 22, 2026. Public companies produce most U.S. crude oil and natural gas - U.S. Energy Information Administration (EIA)

 

Heating Oil Prices Will Likely Cause Economic Hardships in the Oil-Dependent U.S. Northeast: Heating Assistance is Up and Has Been Expedited After Bipartisan Push

      Many of us have long argued that the U.S. Northeast was too dependent on heating oil. Compared to natural gas and LP Gas, heating oil is more expensive, much worse for air quality, and has higher carbon emissions. Prices for the petroleum distillate fuels are likely to remain high into the winter as disruptions in the Middle East and Russia strain global refined products markets. Petroleum distillates are refined products that are produced from crude oil delivered to refineries. It takes time for such products to be made available to buyers. With functional refinery capacity way down in Russia, a major oil products exporter, due to Ukrainian attacks, and with deliveries of refined products limited in the Middle East, another major exporter, it is unlikely that supply will rise and prices will lower in time for winter.   

     People facing a potential doubling of their winter fuel bills are understandably concerned, even if they should have been aware of the possibility. They will likely pay far more than double what a natural gas user pays. They would be better off installing a heat pump or an LP gas tank, lines, and appliances, or getting a natural gas hookup. I bought a house in the late 90s that had a fireplace, a wood burner in the basement, and an oil furnace. We installed a propane/LPG system, including outdoor and indoor piping, converted the stove to LPG, and installed unvented LPG heaters. It was more expensive than hooking up to natural gas, but there were no gas lines available for hookup. We sold the oil furnace.

     As the article in The Cool Down notes, people in Eastern Pennsylvania are facing a near doubling of fuel oil prices from $3 to $5.50 per gallon. This is on top of rising electricity and food prices. One person noted:

"The spike in utilities and heating oil and gas is outrageous, along with the food prices. It's just unsustainable for people. People are going to have to choose between eating and heating their home."

     As a result, people are weatherizing more, and more people are enrolling for government heating cost assistance.

     The price in Maine was $5.77/gal. prompting GOP Senator Susan Collins to lead a bipartisan effort to expedite the release of federal heating assistance. Maine has over 300,000 heating oil customers. The Low-Income Home Energy Assistance Program, or LIHEAP, provides for many seniors and low-income residents around the country. According to The Maine Wire:

“In April, Collins announced that HHS had released another $421.5 million nationally in fiscal year 2026 LIHEAP funding after Collins, Reed and Murkowski led another bipartisan request for the remaining money to be distributed.”

“LIHEAP provides vital relief to thousands of Mainers, helping them avoid the constant worry of choosing between heating their homes and covering other basic necessities,” Collins said following that release.”

     The Maine Wire article also points out that heating assistance dollars are not going as far if they don’t adjust to pricing. The National Energy Assistance Directors Association (NEADA) is calling for a funding increase for LIHEAP.

     In New York, heating oil prices have reached $6.14/gal, up from $3.70 a year earlier.

“The National Energy Assistance Directors Association projected this week that U.S. households relying on heating oil will pay 31.3% more to stay warm this winter, with average seasonal bills reaching approximately $2,300 — a direct result of surging crude oil prices driven by the war in Iran.”

“NEADA is urging Congress to raise funding for the Low Income Home Energy Assistance Program, known as LIHEAP, from $4 billion to $7 billion. Roughly one in six American households has fallen behind on utility payments, and the total amount owed to energy providers has climbed toward $23 billion, NEADA said.

     They also note that virtually all hydrocarbon fuels are facing price increases this winter, including a projected 8.7% increase for propane, which is produced in the U.S. and thus insulated from the Iran and Ukraine wars.

         Fuel oil is both produced domestically by U.S. refineries and is also imported. Like propane, it is largely produced domestically. However, since the international crude oil price has risen much more than the U.S. natural gas price, propane, which is a natural gas derivative (mostly), has not risen in cost as much as fuel oil distillate. Heating oil is often imported in the winter months to supplement stocks. However, if the El Niño weather pattern proves true, it may not be necessary to import any or much fuel oil.

 

References:

 

Pennsylvania homeowners fear ‘eating or heating’ as oil climbs from $3 to $5.50. Aaron Goldstein. The Cool Down, September 21, 2026. Pennsylvania homeowners fear 'eating or heating' as oil climbs from under $3 to $5.50

Heating oil costs rising 31% this winter due to Iran war. Cris Tolomia. Quartz. September 18, 2026. Heating oil costs rising 31% this winter due to Iran war

Maine Heating Oil Hits $5.77 a Gallon as Collins Pushes for Early Release of Federal Heating Aid. Jon Fetherston. The Maine Wire. September 20, 2026. Maine Heating Oil Hits $5.77 a Gallon as Collins Pushes for Early Release of Federal Heating Aid - The Maine Wire

Heating oil explained: Where our heating oil comes from. EIA. Late updated October 2023. Where our heating oil comes from - U.S. Energy Information Administration (EIA)

 

China’s ENN Group Hopes to Produce Electricity Via Hydrogen-Boron Nuclear Fusion by 2030

      China’s ENN Group just broke ground on its ENN Fusion Spherical Ring Hydrogen-Boron Plasma Platform, or Helong-2, from which it hopes to generate its first electricity by 2030. The groundbreaking happened on September 15 at ENN's fusion R&D center in Hebei's Langfang Economic and Technological Development Zone.

     I have not written much about nuclear fusion on this blog mainly because the technology is not ready. I have my doubts about China’s timeline here as well, but the more concrete plans for electricity production in three years are the best I have seen. There are several other interesting fusion projects and pilots happening as well. I will likely write about them if and when they get closer to reality. TAE Technologies in the United States and Marvel Fusion in Germany are companies pursuing hydrogen-boron fusion technology.

     According to The Cool Down:

“ENN says the project is meant to create a "world-leading" hydrogen-boron fusion experimental platform built around more than 10 core systems; the Helong-2 complex will span about 120 acres.”

“If the schedule holds, experiments would start by the end of 2027 after construction and commissioning are finished, and the site should be ready for equipment installation by the end of June 2027.”

“Also called proton-boron fusion, the reaction pairs a hydrogen proton with boron-11 to produce helium nuclei and energy. ENN is targeting 2030 for the project's first electricity from hydrogen-boron fusion.”

     According to World Nuclear News:

“Hydrogen-boron fusion is an advanced nuclear fusion reaction that combines a hydrogen proton with a boron-11 nucleus to produce harmless helium nuclei (alpha particles) and energy without releasing high-energy neutrons.”

     ENN maintains a three-step commercialization strategy for hydrogen-boron fusion, beginning with Xuanlong-50 and Xuanlong-50U, its first two hydrogen-boron fusion devices. Step 1 is for Xuanlong-50U to achieve a hydrogen-boron fusion reaction in 2026. Step 2 is finishing Helong-2 in 2027 and producing fusion power by 2030. Step 3 is having a demonstration reactor producing low-cost electricity by 2035.

"Helong-2, as the third-generation fusion device built by ENN, is a key engineering platform for moving towards a fusion smart power plant," said Yu Jianchao, Chairman of ENN Group. "It carries the important mission of breaking through key technologies of hydrogen-boron fusion and exploring new paths for future energy. It is an important milestone in the commercialisation of hydrogen-boron fusion by ENN and an important step on the road to commercialisation of fusion energy in China."

 

References:

 

China breaks ground on Helong-2 fusion platform, set to produce first hydrogen-boron electricity by 2030.Leigh Cook. The Cool Down. September 21, 2026. China breaks ground on Helong-2 fusion platform, set to produce first hydrogen-boron electricity by 2030

China begins building hydrogen-boron fusion device. World Nuclear News. September 16, 2026. China begins building hydrogen-boron fusion device - World Nuclear News