Energy Prices Are SPIKING and Bitcoin Just Reclaimed $80K! | Simply Originals

Nico Moran (0:00)

Diesel is setting records, energy prices are spiking, and on the chart, we're watching. So is Bitcoin. It just climbed its way back above $80,000.

Now, the establishment is going to tell you that these two things are unrelated. A fuel problem over here, a Bitcoin thing over there. It's not unrelated. Fiat problems have Bitcoin consequences. And here's a question that made me check my calculator twice.

What if diesel is the one honest price left in the entire system? And it's screaming something the currency markets are working very hard to keep quiet. Stay with me, because by the end of this video, you're going to understand three things. One, why a diesel price you'll never personally pay is about to hit your grocery bill. Two, the intervention death spiral. How every fix taking place in the currency and energy markets actually quietly builds the next crisis. And three, I'm going to take Max Keiser's old hash adjusted Bitcoin number, update it for today's network, plug in what diesel says oil should cost, and show you a figure so stupidly bullish, it rattled my sphincter. That's right, prepare for sphincter, rattling bullishness. Two assumptions, one number, I'll show you every single step. No mystery coefficient, hiding under the desk either.

SPEAKER_2 (1:27)

We get a lot to get to. Energy and Bitcoin prices are spiking.

Nico Moran (1:37)

The EIA National Diesel Average was about $6.29 a gallon, up almost 32 cents in a single week. Some outlets have the national record at 643, up over 88% in nine months.

44 states are now at all time record diesel per gas buddy. And here's a little bit of a tell that actually matters. Refinery is at 97% utilization. Distillate inventories about 13% below their normal seasonal level. That's not like a photo of an empty pump. That's the system telling you how much room it has left, which is basically none. Now I don't drive diesel. Maybe you don't either, but we still have a diesel problem because your dinner does. Think about a loaf of bread, equipment on the farm, transport to the mill, delivery to the bakery, another delivery to the store. Diesel touches it basically at every step. It's not the whole price of bread. A 20% fuel jump does not mean 20% bread inflation. I'm not going to lie to you and make it sound scarier, but it is baked into getting it on the shelf. Or as one very calm gentleman put it this week, 99% of what you consume came off a diesel truck. And diesel is the invisible tax on everything. Root of inflation, energy, so you see how it impacts everything. It's all downstream from that. So yes, you can drive an electric car and still lose. You can try to escape the pump, but your groceries are still stuck in traffic. And this is a real physical squeeze. Exxon's Juliet refinery in Illinois went offline after a power outage with flooding hitting equipment on top of it. That's a 275,000 barrel a day facility gone from the board overseas. It's worse. Aramco suspended October crude deliveries to some European customers after damage to its east-west pipeline. So those refiners are out hunting replacement barrels. Russia, the world's number two diesel exporter, has flipped to importing because its refineries keep getting hit. In the US., the world's biggest diesel exporter is reportedly kicking around an export ban. Here's the mental model. This is not one giant tank with a tap marked world oil. The right crude has to reach a working refinery and the finished fuel has to reach the place that needs it. Break any one link and diesel gets expensive even when the crude headline looks calm. You can't put a reassuring oil price into a truck. The driver needs the actual fuel, which brings us to the chart that inspired most of today's show. Zero Hedges Post, Diesel is trading as if Brent crude were $180 a barrel. Now, this does not prove oil's secret real price is $180. Diesel has its own bottlenecks. The gap between crude and fuel you make from it is called a crack spread. No, we did not just change the subject to a different financial crisis or the war on drugs, which it appears, drugs won again. It's how you track the value of refined fuel against the crude input. And a refinery outage blows it wide open. Crude's available. The machine that turns it into diesel is down. You can have flour in the warehouse, back to the bread, and still run out of bread when the oven quits. That's the real meaning of diesel is telling us the truth. The derivatives and drawing down emergency reserves can lean on the paper price of crude. And it's happened. Diesel is the physical delivery, and it's showing you the part of the shortage the crude headline is hiding. Reality doesn't trade on a screen. Reality shows up when the truck needs filled. Okay, here's where it gets serious. When people are getting squeezed, governments feel enormous pressure to do something now.