Why Bernie Sanders Is Wrong About Gas Prices

Authored by Robert Rapier via OilPrice.com,

• Gasoline prices can diverge sharply from crude oil prices due to refining and logistical constraints.

• Tight refinery capacity and geopolitical disruptions have created bottlenecks throughout the fuel supply chain.

• Policies that discourage energy infrastructure investment could worsen future fuel price volatility.

When lawmakers propose solutions to complex economic problems, the first requirement should be a clear understanding of how those problems actually work.

A recent Facebook post by Bernie Sanders comparing today’s oil and gasoline prices to those in 2011 suggests that oil companies are “ripping off” consumers.

The logic is straightforward: if oil prices are roughly the same, gasoline prices should be as well. If they aren’t, someone must be taking advantage.

It’s an intuitive argument, but it misses important elements of the story.

Although gasoline prices have a high degree of correlation with crude oil prices, there are many reasons those prices can diverge. Gasoline is a manufactured product that sits at the end of a long, complex, and often strained supply chain. Focusing only on the price of a barrel of oil ignores the physical realities that determine what consumers ultimately pay at the pump.

From Crude to Gasoline: A System Under Strain

The price of crude oil is only the starting point. Between the wellhead and the gas station lies a network of refineries, pipelines, storage terminals, and transportation systems.

When that system is operating smoothly, the relationship between oil and gasoline prices is relatively stable. When it isn’t, the two can diverge significantly.

That is exactly what we are seeing today.

The Refining Constraint Most People Miss

One of the biggest differences between 2011 and today is refining capacity.

Over the past decade, the U.S. and parts of Europe have lost meaningful refining capacity due to closures, conversions to renewable fuels, and underinvestment. At the same time, demand has rebounded strongly following the COVID-19 pandemic.

The result is a system that is running with very little slack. Refinery utilization rates are often in the mid-90% range. At those levels, even minor disruptions can have an outsized impact.

This is where the concept of the “crack spread” comes into play. It reflects the margin refiners earn by turning crude oil into gasoline and diesel. When capacity is tight, those margins expand. That can push gasoline prices higher even if crude oil prices remain relatively stable.

In other words, you can have plenty of oil available and still face high fuel prices because the bottleneck is not supply of crude, but the ability to process it.

War Doesn’t Just Raise Prices. It Disrupts Systems

The current geopolitical environment adds another layer of complexity.

Conflicts in key regions, including tensions involving the Strait of Hormuz, do not simply raise oil prices. They disrupt logistics. Shipping routes change. Insurance costs rise. Delivery times increase. Supply chains become less efficient.

Refineries are also highly specialized. They are designed to process specific grades of crude oil. When geopolitical disruptions force a shift in sourcing, refiners may have to run less optimal feedstocks, which can reduce the yield of gasoline per barrel. This is also what happened following Russia’s invasion of Ukraine, which resulted in skyrocketing diesel and gasoline prices. 

These are mechanical, physical constraints. They act like a hidden tax on the system, increasing the cost of producing and delivering fuel even if the headline price of crude oil appears unchanged.

This Isn’t New. It’s Just Misunderstood

The divergence between oil and gasoline prices is not a new phenomenon.

After Hurricane Katrina in 2005, for example, crude oil prices softened because refineries were offline and couldn’t process available supply. At the same time, gasoline prices surged due to shortages of finished fuel.

The lesson is simple: the energy system behaves like a chain. If one link breaks or tightens, the entire system adjusts. Prices reflect those constraints.

What we are seeing today is a similar dynamic, driven not by a hurricane but by geopolitical disruption and structural changes in refining capacity.

Profits Are the Result, Not the Cause

It is true that energy companies are reporting strong profits. But those profits are largely a consequence of high prices, not the underlying cause of them.

When supply is constrained, and demand remains strong, prices rise. When prices rise, profits follow.

That distinction is important. If high prices were simply the result of companies choosing to charge more, the solution would be straightforward. But when prices are driven by physical constraints, logistical friction, and global market dynamics, the problem is far more complex.

The Risk of Misdiagnosing the Problem

Policies like windfall profits taxes are often proposed as a response to high energy prices. But if the diagnosis is wrong, the prescription can make the situation worse.

Discouraging investment in refining and midstream infrastructure does not lower prices. It tightens capacity further, increasing the likelihood of future price spikes.

If the goal is to bring down fuel costs, the focus should be on improving system capacity, reducing bottlenecks, and stabilizing supply chains.

The Bottom Line

Comparing oil prices across time periods without accounting for the broader system leads to misleading conclusions.

Gasoline prices are shaped by far more than the cost of crude. Refining capacity, logistics, geopolitics, and infrastructure constraints all play critical roles.

If policymakers want to address high fuel prices effectively, they must start with a clear understanding of those realities.

Because in energy markets, as in economics more broadly, getting the diagnosis right is the first step toward getting the solution right.

Tyler Durden Mon, 05/11/2026 - 14:25

Trump Wants To Slash Child Care Costs By Getting Government Out Of The Way

Child care in America has become a significant financial burden. For many families, it now rivals rent, a mortgage, or student loan payments.

Democrats have been framing child care as a key issue for them heading into the midterms. “Child care continues to get more expensive," said Jaelin O'Halloran, a DNC spokesperson. "While Trump and Republicans have offered no plans to follow through on their promises to lower costs, Democrats are focused on bringing down costs and making life more affordable for working families." 

"House Republicans are waging a war on the American family — slashing food assistance for kids, health care for families, and billions in education programs," said DCCC spokesperson Aidan Johnson. "The DCCC will ensure voters remember that when they head to the polls this November."

The problem with the Democratic argument is structural: their solutions boil down to subsidies to make things more “affordable.” 

The Trump administration thinks that's precisely the wrong prescription and has proposed a plan that largely relies on deregulation rather than subsidies.

The Administration for Children and Families (ACF) at the Department of Health and Human Services is rolling out a sweeping package of new rules and guidance to expand child care choices and reduce costs by streamlining regulations. A notice of proposed rulemaking tied to the effort is set to be finalized within the week, and governors and state legislatures are receiving letters urging them to implement the reforms in ways that directly benefit local families.

The administration frames the effort as a direct response to what one White House official calls a "major cost crunch" facing families with young children. The approach is deregulatory by design, targeting the thicket of compliance requirements, credentialing mandates, and licensing barriers that drive up operating costs for providers — costs that ultimately land on parents.

Another change involves teacher qualification standards. In this new plan, degree and credit-hour requirements for child care workers will be eliminated and replaced with competency-based standards. So instead of academic credentials, the abilities and skills of child care providers will matter.Mandatory staff-to-child ratios and group-size limits will also be loosened, with those decisions given back to parents. The underlying logic is straightforward: regulations that force uniformity inflate costs while locking out anyone who can't afford to comply.

That's particularly true for smaller, faith-based providers. The guidance specifically targets licensing restrictions that have effectively shut out community- and church-based operations, putting them on an unequal footing with large center-based programs. A White House official described current licensing rules as a form of regulatory capture - one that benefits big providers with access to capital and labor while "boxing out" faith-based providers that lack comparable resources. The administration's stated goal is to put faith-based and home-based providers on equal footing with institutional alternatives.

The broader vision is simple: put money in parents’ hands and let them decide. Rather than routing federal dollars into government-approved, center-based programs where bureaucrats pick the winners, the administration wants to expand voucher use — demand-side financing that forces providers to compete for families instead of for contracts. When providers compete, prices fall. When parents choose, quality rises. 

“We want to encourage choice and competition for parents through the promotion of voucherization, and we want to ensure that to the maximum extent possible, faith-based and community neighborhood-based providers, including home-based providers, are able to participate in these programs on equal footing,” the White House official said.

The package includes options for families who don't want institutional child care at all. Under current Temporary Assistance for Needy Families (TANF) rules, married couples face stricter work requirements than single parents. This quirk can effectively penalize low-income married couples for having one parent stay home. ACF will clarify through subregulatory guidance that married couples may share TANF work requirements, making it easier for one spouse to reduce hours or step back from work without running afoul of federal rules. 

"There are a lot of families, particularly low-income families, who may not necessarily want to drop their child off at a center-based child care provider, or any child care provider, and would prefer to stay at home," the White House official said. "We're trying to increase the amount of flexibility that low-income families can receive to have a part- or full-time stay-at-home parent to watch their child within the home."

Tyler Durden Mon, 05/11/2026 - 14:05

American Bankers Attempt Last Ditch Effort To Kill Crypto Market Structure Bill Regarding Stablecoins

American Bankers Association (ABA) CEO Rob Nichols sent an emergency Sunday letter to every bank CEO in the country, urging “immediate engagement” against what he called a stablecoin yield loophole in the Digital Asset Market Clarity Act, days before a Senate Banking Committee markup scheduled for Thursday.

The letter, dated May 11 — Mother’s Day — and addressed to ABA member bank CEOs, asked bank leaders to contact their senators and mobilize their employees to do the same before the committee convenes for a scheduled May 14 executive session on the bill.

“I am reaching out to make every bank leader in this country aware of an urgent advocacy fight that requires your immediate engagement,” Nichols wrote, according to the letter.

He warned that, without further changes, “we believe the current proposal would unnecessarily incentivize the flight of bank deposits into payment stablecoins, putting both economic growth and financial stability at risk”.

The timing of the letter drew sharp public pushback from Coinbase Chief Legal Officer Paul Grewal, who posted on X that the ABA’s alarm bells were misplaced.

“Maybe the CEO didn’t get the message from the people actually in the room at the WH in meeting after meeting,” Grewal wrote.

“We’ve already had ‘immediate engagement.’ You got ‘idle yield’ killed. I know because I was there — you weren’t. Take yes for an answer. Move on. Stop wasting the time of the Senate and the American people.”

Sen. Bernie Moreno, a member of the Senate Banking Committee, fired back at the ABA in a social media post, saying “the banking cartel in full panic mode” and accusing it of deceiving lawmakers by characterizing stablecoin yield as a “loophole” - a term he said was an insult to the bipartisan work already done during the GENIUS Act debate. 

As Micah Zimmerman reports for BitcoinMagazine.com, the ABA's emergency outreach came just hours after the Senate Banking Committee has set May 14 as the date for its long-delayed markup of the Digital Asset Market Clarity Act, the most consequential piece of cryptocurrency legislation ever to reach this stage in Congress, as a last-minute lobbying blitz from major banks and a Democratic ethics standoff threaten to derail the bill before it clears committee.

The executive session is scheduled for 10:30 a.m. at Room 538 of the Dirksen Senate Office Building in Washington, D.C., where committee members will debate amendments and vote on whether to advance the legislation to the full Senate floor. Committee Chairman Tim Scott (R-SC) confirmed the date last week, and live video feed of the proceedings will be available to the public.

The CLARITY Act — formally H.R. 3633, the Digital Asset Market Clarity Act of 2025 — passed the House of Representatives on July 17, 2025, by a 294–134 bipartisan vote, with all 216 Republicans in support and 78 Democrats crossing the aisle. Since then, the bill has stalled in the Senate through two cancelled markup sessions, extended negotiations over stablecoin regulation, and an intensifying lobbying fight between the crypto industry and the traditional banking sector.

At its core, the legislation would draw a regulatory boundary between the Securities and Exchange Commission and the Commodity Futures Trading Commission, settling years of jurisdictional litigation over whether digital assets are securities or commodities. 

Under the bill, the CFTC would receive exclusive jurisdiction over spot and cash markets for “digital commodities” — tokens intrinsically linked to a functioning, decentralized blockchain — while the SEC retains authority over investment contract assets and primary market fundraising.

Stablecoins are carved out as a separate category under shared oversight.

Crypto jurisdiction fight reaches the U.S. Senate

The Senate version of the bill expanded well beyond the House text, growing to nine titles covering decentralized finance protections, illicit finance provisions, bankruptcy safeguards for crypto customers, and the Blockchain Regulatory Certainty Act, which provides safe harbors for software developers.

The May 14 session marks the Senate’s first formal committee vote on CLARITY after months of procedural slippage. Committee Chairman Scott had originally targeted September 2025 for a Senate floor vote, then moved the goalposts to the end of 2025, and most recently told Fox Business he hoped to bring the bill to the Senate floor by June or July 2026.

The calendar pressure is severe: if the bill does not clear the Senate Banking Committee before the May 21 Memorial Day recess, the entire process resets — and Senators Cynthia Lummis (R-WY) and Bernie Moreno (R-OH) have both warned that failure before Memorial Day could push the next viable legislative window to 2030 or beyond.

The White House has set July 4 as its target for a presidential signature.

The banking industry’s failing crypto lobby

The banking industry has spent months arguing that even partial stablecoin yield — particularly when routed through exchanges and third-party platforms rather than issuers directly — could trigger massive deposit outflows from federally insured banks.

A joint fact sheet released by the ABA, Bank Policy Institute, Consumer Bankers Association, Financial Services Forum, and Independent Community Bankers of America cited a Treasury Department report estimating that stablecoins could lead to as much as $6.6 trillion in deposit outflows if yield is permitted.

That figure faces pushback from within the executive branch. The White House Council of Economic Advisers released a report in April finding that prohibiting stablecoin yield “would do very little to protect bank lending,” estimating that a ban would increase bank lending by only 0.02%. The ABA objected to that report’s findings within days of its release.

Nichols sent a separate joint letter with 52 state bankers associations to Congress in December urging lawmakers to close the yield loophole, and the ABA joined those same groups in a similar letter to the OCC in April.

The Senate Banking Committee markup on May 14 represents a critical procedural hurdle for the Clarity Act. Even if the bill clears the committee, it still requires 60 votes on the Senate floor, reconciliation with the Senate Agriculture Committee’s version, alignment with the House-passed bill from July 2025, and a presidential signature. 

The White House has set a July 4 target for the bill’s passage.

Democrats threaten withdrawal of CLARITY Act as heavy-hitters chime in

The bill carries heavyweight backing from within the Trump administration. SEC Chair Paul Atkins publicly urged Congress on April 9 to move CLARITY to President Trump’s desk, stating that both the SEC and CFTC stand ready to implement the law the moment it is signed. Atkins has cited a project he calls “Project Crypto” as an internal agency readiness effort.

Treasury Secretary Scott Bessent published an op-ed in the Wall Street Journal framing the CLARITY Act as a national security matter, warning that without U.S. regulatory certainty, blockchain developers and crypto companies continue to migrate to Singapore and Abu Dhabi. White House crypto adviser Patrick Witt has described the stablecoin yield compromise as closed.

Senator Lummis, who chairs the Senate Banking Subcommittee on Digital Assets, posted a single word on X after the Senate returned from Easter recess — “Clarity.” Speaking at the Bitcoin Conference in late April, she was direct: “We are gonna markup the CLARITY Act in May. We are gonna get it to the finish line. We are gonna have the market structure that allows us to innovate.”

Meanwhile, Democrats are threatening to withhold support unless the bill includes ethics provisions targeting crypto holdings by public officials, a demand Republicans argue could derail the legislation entirely. 

Tyler Durden Mon, 05/11/2026 - 13:45

Target Hospitality Jumps As Data Center Boom Fuels Demand For Worker Camps

Target Hospitality shares jumped in premarket trading after the company announced a new contract to provide mobile housing solutions and related hospitality services for workers at data center construction projects.

The 48-month contract could generate upward of $750 million in revenue for Target Hospitality, which builds, owns, leases, and operates large temporary or semi-permanent "communities" for workers of major projects. The contract covers 3,370 beds.

Historically, Target Hospitality generated revenue from energy, natural resources, and government-related customers, but since the data center buildout boom, its temporary housing solution services have been in high demand.

The company said that since the start of the year, it has announced over $1.4 billion in multi-year contracts amid data center buildouts, representing more than 9,000 beds.

"These awards reinforce the scale, customer relevance and capital-efficient deployment capabilities of Target Hyper/Scale, while strengthening Target's exposure to long-duration demand across AI-driven data center and related critical infrastructure development," the company wrote in a press release.

CEO Brad Archer wrote in a statement that the company is "entering the next phase of our growth with strong momentum and increasing confidence in our long‑term strategy. Since February 2025, we have secured more than $2.0 billion of multi‑year contracts, including approximately $1.8 billion within our rapidly expanding WHS segment, meaningfully enhancing revenue visibility, supporting consistent cash flows and driving improved margin contributions. These wins position Target to further expand its presence across high-value end markets with long-term momentum."

In premarket trading, Target Hospitality is up nearly 10%. On the year, the stock has surged 91%, as of Friday's close.

To frame Target Hospitality in an easy-to-understand way for investors: It is creating mobile camps for workers on data center projects.

And likely to see more contracts given hyperscalers will spend an estimated $700 billion in capex this year…

The other read here is that the data center boom is hitting the real economy, whether through mobile worker camps in this case, power solutions (read the CAT report), or a long list of other areas. About one year ago, UBS outlined that the data center boom would filter into the real economy in the first half of 2026 (read here).

Just imagine if the Harris regime and Democrats were in power. They would likely have slowed data center buildouts, and the US economy would have entered an economic downturn.

Tyler Durden Mon, 05/11/2026 - 13:30