Refineries brace for crude drought

What It Covers

This Marketplace episode examines how Middle Eastern oil supply disruptions are threatening California and Asian refineries, while also covering rising beef prices, slowing housing starts, the economics of ski resort mega-passes, and deteriorating conditions facing Winter Paralympic athletes competing in Italy.

Key Questions Answered

• •Refinery vulnerability: California refineries import heavily from Iraq and cannot switch to Western Canadian heavy crude as a substitute — they lack desulfurization infrastructure, and building it requires years of construction plus substantial capital investment. A full refinery shutdown takes one to two months to reverse, even after crude supply resumes.
• •Pipeline gap: No pipeline infrastructure connects Texas Gulf Coast oil production to California refineries, making domestic crude rerouting impossible in the short term. Refineries must rely on existing inventory stockpiles, which will eventually deplete, forcing unit shutdowns if Middle Eastern supply through the Strait of Hormuz remains blocked.
• •Beef price pressure: US average beef prices reached $6.73 per pound, up from under $4 in January 2021. US cattle herd numbers are at historic lows, which supports prices but creates extreme volatility — ranchers report swings of $200–$300 per head between sale days, making timing decisions critical to profitability.
• •Housing construction drag: Single-family housing starts fell 2.8% in early 2025 versus December. Builders face five simultaneous cost pressures: skilled labor shortages, lot scarcity, zoning delays, expensive construction loans tied to Fed short-term rates, and elevated materials costs. Two anticipated Fed rate cuts this year could lower construction loan costs and unlock supply.
• •Ski mega-pass economics: Vail's Epic Pass, launched in 2008 at roughly $100 peak day-ticket equivalent, has driven walk-up lift ticket prices to nearly $400. Vail expanded from 6 to 42 resorts globally. Pass sales now exceed 2 million annually but appear to have plateaued, pushing Vail toward harder international expansion in structurally different European markets.