[Matt Insley here.

If you’ve traveled this summer, you might have noticed that air travel is crazy expensive.

There’s a reason for that. And according to my colleague Byron King, it’s creating an intriguing opportunity for investors.

So we’re skipping the usual market notes and handing things over to Byron today. He’ll explain what’s happening — and share six ways you can potentially profit from this supply squeeze.]

The next time you book a flight, brace yourself. Because airline sticker shock is not going away.

In July, U.S. airfares were 25.5% higher year-over-year. And travelers can expect higher fares, thinner schedules and fewer flights on routes that no longer make economic sense.

The reason is simple: Across the globe, jet fuel volumes are tight and getting tighter, and upward price pressure is now built into the entire aviation system. It’s bad news for passengers and marginal airlines.

My point is the world needs more jet fuel, but the refining system is stretched too thin. So companies that can turn crude oil into high-value jet fuel gain leverage.

In other words, this is not just another oil story. It’s a refining story.

And even if the Iran conflict ended tomorrow and the Strait of Hormuz reopened fully, jet fuel would not return to normal.

Every day, refineries around the world take crude and turn it into gasoline, diesel, jet fuel, petrochemicals and other products. But when refineries are maxed out, more crude oil does not automatically mean more jet fuel.

So the price of refined products can tighten even when crude supplies look adequate on paper. (Not that crude supplies are “adequate” right now.)

Along these lines, Shell plc CEO Wael Sawan recently stated that the world faces a crude deficit of about 1.2 billion barrels related to the Iran conflict. Barrels have been locked in the Persian Gulf, stranded or never produced.

That supply deficit will not be cured for a long time to come.

Your Rundown for Monday, August 17, 2026...

When the Schedule Gets the Knife

Now consider that despite the Iran mess, underlying demand for air travel has remained resilient. Thus, jet fuel remains a key pressure point.

Industry data point in the same direction.

The International Air Transport Association has described jet fuel as disproportionately affected by refinery constraints and logistics bottlenecks, with available supply down significantly and regional spot prices far above crude-oil-based benchmarks.

Airlines can hedge fuel and renegotiate supply contracts. But none of those tactics creates new refining capacity.

The first thing that happens is that air carriers pass their higher costs through to ticket buyers via higher fares, fuel surcharges and extra fees.

Then the schedule gets the knife.

Flight frequencies fall or city pairs are trimmed, which means smaller markets lose options. And low-cost carriers, which rely on high aircraft utilization and thin margins, feel the squeeze first.

Meanwhile, legacy carriers are turning this situation into a competitive advantage. When high fuel costs knock weaker low-cost competitors out of certain routes, the large carriers gain pricing power.

That’s not great for travelers, but it’s exactly how tight fuel markets ripple through the airline business.

For investors, my view is to avoid airlines that inevitably face higher fuel bills. The better angle is companies that sit at the bottleneck, namely refiners and integrated oil companies with major downstream capacity.

If jet fuel stays tight, refiners don’t need the whole economy to boom. They just need the spread between crude inputs and finished fuel to remain elevated. In a world of scarcity, that’s exactly where the leverage is.

Five Refiners and a Fund

Here are five U.S. refining-oriented energy plays that belong on your watch list as the jet fuel squeeze works through airline schedules and passenger fares:

1. ExxonMobil (XOM) — A global integrated major with deep refining, logistics and downstream reach. Exxon gives investors exposure not merely to crude oil, but to the system that upgrades crude into the fuels the world actually burns. Its integrated model offers exposure from production through refining and distribution, while its balance-sheet strength helps it ride through volatile energy cycles.

2. Chevron (CVX) — Another integrated heavyweight, with major downstream capacity along the Gulf Coast and West Coast. Chevron offers scale, balance-sheet strength and refining exposure in a market where product availability matters. Its downstream assets provide leverage to tight gasoline, diesel and jet fuel markets.

3. Marathon Petroleum (MPC) — One of the clearest pure refining plays in the group. Marathon operates one of the largest U.S. refining systems, giving it direct exposure to crack spreads and tight refined-product markets. Its large U.S. network positions it well if product shortages persist.

4. Phillips 66 (PSX) — A downstream and midstream name with refining assets, product logistics and chemicals exposure. In a constrained product market, that integrated footprint can matter. Its midstream and logistics businesses also support the movement of product to market, reducing reliance on any single fuel stream.

5. Valero Energy (VLO) — A large independent refiner with major U.S. capacity and strong leverage to refined-product margins. If jet fuel and diesel stay tight, Valero is exactly the kind of downstream operator to watch. Its pure-play refining exposure gives it strong sensitivity to crack spreads.

Among these five names, the common thread is leverage via refining.

Of course, these companies are not identical, and none is immune to politics, recession risk, maintenance outages or swings in crude prices. But if the world is short of finished fuels, the real leverage shifts downstream to the refiners.

For a broader basket approach, there’s also an ETF focused on the refining sector:

VanEck Oil Refiners ETF (CRAK) — This fund is designed to track global companies involved in crude oil refining, offering diversified exposure to the same bottleneck discussed above.

The Toll Collectors of Global Aviation

Higher jet fuel prices don’t just make tickets more expensive. They force airlines to rethink where they fly, how often they fly and which routes are worth keeping.

That’s painful for travelers and bad news for marginal carriers. But it can mean wider margins and stronger cash flow for the refiners supplying the fuel.

The world needs more crude oil, yes…

But even more, it needs barrels refined into usable fuel today, tomorrow, next week.

And when jet fuel is scarce, refiners stop looking like sleepy cyclicals in a dead-end industry and start looking like cash-flowing toll collectors.

That’s all for now. Thank you for subscribing and reading.