Global Gas Shortage: This Is When Oil Price Doubles | Josef Schachter

David Lin (0:00)

It's Wednesday, September 23rd, and US diesel prices averaged $6.52 a gallon, up 76% from just a year ago. Diesel prices are at a historic all-time high, and this has a lot of people worried because diesel is the core transportation fuel for 86% or above for all commercial trucking in the United States. Our next guest says, this is not the last of high prices. He's going to tell us exactly how high energy prices will go from here, and importantly, how long they will stay high.

Geopolitical uncertainty still remains very high as well. So here's President Trump at the UN General Assembly threatening to annihilate Iran if a deal doesn't go through.

SPEAKER_2 (0:43)

But I have a big decision to make.

Will a deal be made with Iran that lets them rebuild and create a far greater country than it ever was before? May be one of the greatest in the Middle East or even the world. Or do I annihilate the Islamic Republic and do it quickly, never giving them a chance to kill and destroy people and countries again? Do I drive them into hell with no chance of survival and no hope of future greatness or generations? But I believe we'll make a deal right after the election.

David Lin (1:25)

There's also the possibility now that the US may ban diesel exports. While President Trump supports banning diesel exports, Energy Secretary Chris Wright warned today that the move could actually raise gasoline and jet fuel prices. We're going to find out why.

Meanwhile, Iran and the US have resumed indirect talks, but a senior Iranian official told Reuters today that the two sides remain far apart on ending the war and reopening the Strait of Hormuz. Reuters also reports that preliminary shipping data recorded just three commodity vessels passing through Hormuz on Tuesday, below the 10-day average of about 15, though those figures may be revised because some ships switch off their transponders. But this is what Trump had to say at the UN General Assembly earlier this week about traffic in the Strait of Hormuz. Take a listen.

SPEAKER_2 (2:12)

The United States Navy has recently escorted more than one billion barrels of oil out of the Strait of Hormuz, and more oil is flowing than at any point since the start of the war. We're taking 22, 25, 30, 32, and 37 ships out, respectively, every single day, every single night.

David Lin (2:34)

So that's true. Then why are crude oil prices still near $100 a barrel? We're going to find out right now on Kalshi. There's a 40% chance that the US will be banning diesel before the upcoming midterm elections on November 3rd. If you agree with those odds, a $50 trade can yield potentially $115 if you're right. Our next guest says, well, he's going to give us his prediction, so stay tuned. This video is sponsored by Kalshi, the largest prediction market in the United States. Unlike a sports book, you're trading peer-to-peer on real world events from economic data to political outcomes and the price moves based on public opinion, not a house. Go to the link in the description down below. We'll scan the QR code here and use my code LIN.

New users can get $25 NAP credits when they trade $25. Kalshi is CFTC approved and available in all 50 states, including California and Texas. Josef Schachter joins us now. He is a president of Schachter Energy Research Services and author of The Schachter Report and a 40-year veteran in the energy sector. Welcome back to the show, Josef. Good to see you.

Josef Schachter (3:38)

Nice to be back with you, David.

David Lin (3:40)

Today's news, opening up a road report. Trump is supporting a diesel export ban, while Energy Secretary Chris Wright says it definitely doesn't work. So there's a conflicting series of opinions here within the administration itself. Not everybody is in support of this. Diesel prices have surged to record highs.

Now, the blunt tool of banning diesel exports definitely doesn't work, Wright said, at an event hosted by the economist in New York. If you can't export the diesel that comes out of our refineries, you run out of places to store it, and you have to reduce US refining, which would put upward pressure on gasoline prices and jet fuel prices. Can you just elaborate on whether or not that logic makes sense to you? It seems counterintuitive immediately when you think about it.

The banning of exports should in theory reduce prices at least at home near America.

Josef Schachter (4:35)

Yeah, it depends upon the product. So when the refineries get the heavy oil, they crack it into the things that are needed domestically, and then they also then, of course, want to make money if they can, when diesel prices in Europe and Asia are much higher. So they crack what they can from the barrel, and the barrel gives you a certain amount of jet fuel, certain amount of gasoline, certain amount of diesel. So if they ban exports of diesel, that would bring diesel prices down.