Rebalance Sourcing After Permian Gas Growth and Refinery Tightening

What happened

Permian marketed natural gas production increased substantially between 2021 and 2025, driven by rising gas‑oil ratios as reservoirs decline. The extra gas volume materially changes regional supply availability and should be treated as an ongoing baseline shift rather than a one-off; watch whether growth continues to outpace crude at the same rate

Why the category manager should care

Treat the Permian gas increase as a persistent supply change because it raises baseline volumes and alters midstream and service demand dynamics

Key facts

• Permian gas production rose significantly from 2021 to 2025
• Growth driven by higher gas‑oil ratios as reservoirs decline

What happened

U.S. jet fuel production rose sharply after jet fuel prices jumped following the Strait of Hormuz closure, with refiners maximizing jet yields and sending increased output to export markets. The notable detail is that much of the extra production is exported while domestic inventories remain above average, so follow export flows to see domestic allocation impacts

Why the category manager should care

Expect refiners to favor higher‑margin jet fuel runs and export commitments because margins and spot prices changed refinery economics

Key facts

• U.S. jet fuel production reached record weekly estimates after late-February shock
• Increased production is largely exported while domestic inventories stay above average

What happened

U.S. operable refinery atmospheric distillation capacity decreased in 2025 as a couple of large refineries ceased operations, reducing overall national refining flexibility. That reduction is operationally real because it changes the national and regional ability to reblend and shift production, so buyers should watch regional capacity and turnaround schedules

Why the category manager should care

Treat refinery capacity decreases as a structural tightening because lost operable units reduce rerun and reblend flexibility

Key facts

• Operable atmospheric distillation capacity declined compared with previous year
• Two refineries ceased operations, reducing capacity in specific regions

What happened

In CAISO, utility‑scale solar generation surpassed natural gas in the first five months of 2026, driven by capacity additions and battery storage growth that also changed hourly dispatch patterns. The operational detail is that midday gas demand fell while evening ramps grew, so buyers exposed to gas peaking or ancillary services should reassess firming needs

Why the category manager should care

Solar plus storage reduces midday gas burn but increases late‑day peaking needs; source firming or fast‑start capacity accordingly

Key facts

• Utility‑scale solar generation rose and exceeded natural gas on most days in early 2026
• Battery storage capacity and discharge increased markedly, altering dispatch patterns