Why Asphalt
Not shiny. Not glamorous. Just an indispensable commodity.
“I work the Strike. Kevin lives in the Aether.”
Last week, Kevin broke down the blockchain architecture behind DRRUs—the compliance tradeoffs, the token standards, the digital infrastructure that makes fractional commodity ownership possible. That’s the Aether.
This is the Strike: why our first project targets a commodity most people drive over without thinking about.
I’m not a commodities analyst. I’m an engineer who runs operations for an oil sands producer in Utah. But when you’re in the thick of it—reading the geological surveys, diving into supply-side data, watching refineries close—you start to see patterns that don’t make the news.
This is what I see. And it’s exactly the kind of opportunity AetherStrike was built for: proven reserves with real market demand that traditional financing has overlooked.
New here? Start with Introducing AetherStrike for the full picture of what we’re building.
Follow along as we bring our first Strike to market.
A Note on Terminology
Before we dive in: this article is about asphalt binder—the heavy petroleum product that binds aggregate into the pavement we drive on. In the industry, ‘asphalt’ technically refers to the finished mix of binder and rock.
Here’s the production chain: We mine oil sands—specifically, bitumen ore from the reserve. That ore contains three marketable components: bitumen (which becomes asphalt binder), a diesel fraction, and sand. The bitumen is processed and sold as performance-grade asphalt binder to paving contractors and DOTs.
But nobody says ‘Why Bitumen Ore’ at a dinner party, so we’re keeping it simple.
Also worth noting: unlike Canadian oil sands operations that produce synthetic crude for refining into transportation fuels, our model produces asphalt binder directly from the ore. That distinction matters for two reasons: it’s central to why this market opportunity exists, and it means our production pathway—surface mining and regional delivery versus ocean transport and refinery processing—should deliver meaningfully lower carbon intensity than traditional refinery-sourced asphalt.
A Tightening Market
America’s asphalt supply chain is under more pressure than most people realize—and it’s starting to shift.
That might sound like headline bait. It’s not. Industry analysts expect asphalt supply from existing production pathways to remain mostly intact under moderate energy transition scenarios.1 But ‘mostly intact’ masks significant regional variation—and the structural changes reshaping U.S. refining are creating both supply pressure and market opportunity.
Under more aggressive transition scenarios—particularly net zero targets—the picture shifts dramatically. Wood Mackenzie (the leading data and analytics firm for energy and natural resources) projects that global refining capacity could fall by two-thirds by 2050, pushing asphalt binder supply below anticipated demand and creating a need for alternate supply sources.2
And almost no one is talking about it—because when we think about refinery closures, we think about gasoline prices. We don’t think about what happens to the 2% of refinery output that goes into the material under our tires.3
California is the most acute example. Here’s what’s already happened:
Q4 2025: Phillips 66 closed its Los Angeles refinery—139,000 barrels per day of capacity, gone.4
April 2026: Valero will close its Benicia refinery—145,000 barrels per day. That’s 45% of Northern California’s paving-grade asphalt supply.5
By End of 2026: California’s refinery count drops from 23 (in 2000) to just 11. Only five will be large-scale facilities.6
Combined, these closures wipe out approximately 17% of California’s refining capacity in 12 months.78 And California doesn’t exist in isolation—the West Coast has historically been a net exporter of asphalt to Arizona, Nevada, and the Intermountain states. When California’s supply tightens, the shockwave travels inland.
But this isn’t just California. The pattern is national.
In February 2025, LyondellBasell closed its Houston refinery—268,000 barrels per day, the oldest refinery on the Houston Ship Channel, gone after 107 years of operation.9 In Wisconsin, when the Husky Superior refinery exploded in 2018, regional contractors saw their asphalt source suddenly 500 miles away instead of 100. Prices spiked. Projects stalled. It took five years and $1.2 billion to rebuild.10
Industry analysts project capacity reductions of 900,000 barrels per day on the West Coast, 700,000 in the Midwest, and 300,000 on the East Coast through 2045.11 California is simply where the pressure is hitting first.
Paving contractors in the region are already being told to expect shorter price-hold periods, supply disruptions, and new escalation clauses.12 The shift isn’t theoretical. It’s happening now.
Why Refineries Are Closing
Valero didn’t close Benicia because asphalt demand collapsed. Phillips 66 didn’t shutter their LA refinery because people stopped needing roads.
They closed because their core business—transportation fuels—no longer pencils out in certain markets. Gasoline demand is declining. California’s taxable gasoline sales fell from 15.6 billion gallons in 2017 to 13.6 billion in 2023.13 When refiners see declining demand and rising operational costs, they don’t invest in new infrastructure—they close.
Here’s the problem: asphalt binder represents only 2% of typical refinery output.14 Refiners don’t make investment decisions based on asphalt—they make them based on gasoline, diesel, and jet fuel. When they close because transport fuel economics don’t work, asphalt supply disappears as collateral damage.
The Counterargument
Some will argue: “Can’t the remaining refineries just shift their operations? Produce more asphalt from the heavy residuals instead of making coke (petroleum coke, a solid carbon byproduct sold to industrial markets)?”
In theory, yes. In practice, three problems:
First, this requires capital investment in an industry that’s contracting, not expanding. Refiners aren’t building new deasphalting units or modifying their cokers when their exit timeline is measured in years, not decades.
Second, even if every remaining West Coast refinery optimized for asphalt tomorrow, the net capacity loss from closures likely exceeds any operational gains. You can’t optimize your way out of losing 17% of your refining base.
Third—and this is the tell—the industry’s own analysts aren’t betting on operational shifts to solve the problem. A January 2025 study by Wood Mackenzie for the Asphalt Institute Foundation explicitly calls for “new dedicated binder production capacity via greenfield plants or refinery conversions.”15
When the leading energy research firm says the industry needs new standalone capacity, that’s not a suggestion. It’s a signal.
The Demand That Doesn’t Go Away
Electric vehicles need roads. Autonomous vehicles need roads. Every Amazon package delivered to your door travels on roads. The energy transition changes what powers vehicles—it doesn’t change the fundamental infrastructure they travel on.
→ 4+ million miles of paved roads in the U.S., 94% asphalt16
→ $124.8 billion in public highway construction expected in 202517
→ D+ grade for U.S. roads from ASCE’s 2025 Report Card18
→ $684 billion infrastructure funding gap for roads through 203319
The Infrastructure Investment and Jobs Act—the biggest infrastructure bill since Eisenhower built the Interstate system—expires September 30, 2026. That’s eight months from now.20 Congress is already debating the next highway bill. Whether funding increases, decreases, or flatlines, roads will still need to be paved. The question is where the material comes from.
We’re not facing declining demand for asphalt. We’re facing stable demand colliding with tightening supply.
The Import Question
When domestic supply tightens, the obvious answer is imports. But here’s what makes asphalt different from gasoline: the global supply chain for heavy crude—the feedstock that becomes asphalt—is concentrated in some of the most geopolitically volatile regions on Earth.
California currently imports over 60% of its crude oil from foreign sources—primarily Iraq, Ecuador, Saudi Arabia, and Brazil.21 Heavy crude suitable for asphalt production comes from Canada (politically stable, but pipeline-constrained), the Middle East, and Latin America.
Recent events underscore the fragility of these supply chains. Venezuelan heavy crude—once a major source for U.S. Gulf Coast refiners—has been effectively unavailable for years due to sanctions and mismanagement. Production collapsed from 3.5 million barrels per day in the late 1990s to under 1 million today.22 The ongoing instability there, combined with tensions across other producing regions, highlights why import dependency carries structural risk.
The Wood Mackenzie report noted that increased reliance on imports would face “infrastructure limitations and higher costs,” creating “a commercial case for investment in additional domestic standalone production facilities.”23
Translation: foreign supply isn’t the answer. Domestic production is.
Enter the Oil Sands
When most people hear “oil sands,” they think of Alberta. They think of synthetic crude production. They think of the environmental debates around Canadian heavy oil extraction.
This isn’t that story.
Utah has the largest oil sands deposit in the United States—14 to 15 billion barrels of measured oil-in-place, with an estimated total resource of 20 to 32 billion barrels.24 The Asphalt Ridge formation near Vernal has been known since the early 1900s as a premium source of natural bitumen. Before modern refining existed, this material was used directly for road paving.
Read that again: directly for road paving.
That’s not a new innovation. That’s going back to what worked before the oil industry made asphalt a byproduct of something else.
The Valkor Model
Valkor holds mineral rights to over 25,000 acres in the Uintah Basin, with more than 4.5 billion barrels of heavy oil in place.25 We’re not producing oil that then gets refined into asphalt. We’re producing asphalt binder directly:
Surface Mining: Utah oil sands lie close to the surface in rich seams averaging 10-12% bitumen by weight. The ore is excavated using conventional mining equipment.
Solvent Extraction: The mined ore is processed through a closed-loop solvent extraction facility—no water used in our process.
Direct to Market: The resulting asphalt binder meets roadway performance grade specifications and can be sold directly to asphalt plants, paving contractors, and state DOTs.
No crude transport across oceans. No complex refining. No dependence on the economics of gasoline to justify our existence. No geopolitical exposure to Venezuela, the Middle East, or anyone else.
Our supply chain is measured in miles, not oceans.
Why Valkor specifically? Beyond the reserve base, Valkor has spent years developing the extraction process, securing permits, and building relationships with regional buyers. This isn’t a concept—it’s an operation moving toward production. I’ll write more about the company, the team, and the technical approach in a future post.
The Carbon Story
Let’s be clear about what asphalt is—and what it isn’t.
Asphalt comes from oil, but it is not a fuel. Unlike gasoline, diesel, or jet fuel, asphalt binder is not combusted. It sits in the road. It forms the foundation of critical infrastructure that society will need regardless of what powers our vehicles.
Not a legacy fuel. Essential infrastructure.
As noted earlier, our production pathway should deliver meaningfully lower carbon intensity than traditional refinery-sourced asphalt. Traditional production requires extracting crude, shipping it across oceans, processing it through a refinery, then distributing the product. Our model: surface mine the ore, extract the bitumen with a closed-loop solvent process, deliver it regionally.
We’re not claiming specific numbers until we complete formal lifecycle assessment—but the supply chain physics strongly favor direct production.
Why This Is the First Strike
When we announced our partnership with Valkor, some people asked: “Why start with oil sands? Why asphalt?”
See: AetherStrike and Valkor Announce Inaugural Partnership
It’s a fair question. Most real-world asset tokenization projects chase gold and precious metals—the shiny stuff that makes headlines. We started with something less glamorous but no less critical: the material that holds infrastructure together.
Here’s why:
Stable demand. Roads don’t disappear with EVs. North American asphalt demand holds steady at approximately 400,000 barrels per day regardless of energy transition scenario.26
Tightening supply. Refinery closures are accelerating. Wood Mackenzie projects potential shortfalls of 55,000 to 205,000 barrels per day depending on transition speed.27
Domestic strategic value. Ongoing volatility in global heavy crude markets—from Latin America to the Middle East—underscores why domestic production matters.
A production model that makes sense. Direct extraction eliminates refinery dependency and delivers a simpler path to market.
This is exactly what we built AetherStrike to find: proven reserves with real market demand, operational credibility, and a path to production that doesn’t depend on traditional financing structures.
What Could Go Wrong
No investment opportunity is without risk. Here’s what we’re watching:
Execution risk. Scaling from pilot to commercial production requires capital, operational discipline, and time. Mining and extraction projects face weather, equipment, and logistics challenges.
Market timing. If refinery closures slow or new competitors emerge faster than expected, pricing dynamics could shift.
Regulatory environment. Permitting, environmental compliance, and state-level policy changes could affect timelines or costs.
We believe the fundamentals are strong. But we’re building something new, and new things carry uncertainty. We’ll be transparent about challenges as they arise.
• • •
We’re not betting against the energy transition. We’re filling a gap that the energy transition is creating.
Refineries are closing because gasoline demand is declining. That’s the transition working. But roads still need to be paved. Someone has to solve the supply problem that creates.
That’s what we do. That’s the Strike.
What Comes Next
Our First Strike is targeting production in Q2 2026. Between now and then, we’ll be sharing more about:
→ The geology behind Asphalt Ridge and our certified reserve base
→ The technology behind our extraction approach
→ How tokenization changes access to commodity development
→ The details of participating in Our First Strike
If you’ve been following along since Kevin’s piece on token standards, you now have both sides of the picture: the Aether and the Strike.
Don’t Miss the Next Update
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Learn more: aetherstrike.com | LinkedIn | X (@aetherstrike)
This article is for informational purposes only and does not constitute an offer to sell or solicitation of an offer to buy any securities. Market projections and estimates are based on third-party research and are subject to change. Investment in commodity development carries risk, including potential loss of capital.
Sources
Wood Mackenzie, “Analyzing the Petroleum Asphalt Binder Supply Chain under Energy Transition Scenarios,” January 2025, commissioned by the Asphalt Institute Foundation.
Wood Mackenzie, “Analyzing the Petroleum Asphalt Binder Supply Chain under Energy Transition Scenarios,” January 2025, commissioned by the Asphalt Institute Foundation.
Wood Mackenzie, “Analyzing the Petroleum Asphalt Binder Supply Chain under Energy Transition Scenarios,” January 2025, commissioned by the Asphalt Institute Foundation.
U.S. Energy Information Administration, “Refinery closures present risk for higher gasoline prices on the West Coast,” Today in Energy, 2025; Phillips 66 company announcements.
Valero Energy Corporation press releases and California Energy Commission filings, April 2025; For Construction Pros reporting on Benicia asphalt supply share.
American Petroleum Institute, “California’s refining capacity continues to fall,” 2025.
U.S. Energy Information Administration, “Refinery closures present risk for higher gasoline prices on the West Coast,” Today in Energy, 2025; Phillips 66 company announcements.
Valero Energy Corporation press releases and California Energy Commission filings, April 2025; For Construction Pros reporting on Benicia asphalt supply share.
Houston Chronicle, LyondellBasell closure reporting, January-February 2025.
Duluth News Tribune, "Refinery explosion roils regional asphalt supply," 2018-2023 coverage; Cenovus Energy announcements.
RBN Energy, "Us and Them - U.S. Refiners to Remain Global Leaders, but Prospects Vary Widely by Region," August 2025.
For Construction Pros, "How California's Refinery Closures Hit Asphalt Contractors," 2025.
California Energy Commission, taxable gasoline sales data; Lodi411 analysis, 2025.
Wood Mackenzie, "Analyzing the Petroleum Asphalt Binder Supply Chain under Energy Transition Scenarios," January 2025, commissioned by the Asphalt Institute Foundation.
Wood Mackenzie, “Analyzing the Petroleum Asphalt Binder Supply Chain under Energy Transition Scenarios,” January 2025, commissioned by the Asphalt Institute Foundation.
American Society of Civil Engineers (ASCE), 2025 Infrastructure Report Card for America's Infrastructure.
For Construction Pros, "2026 State of the Road Building Industry," January 2026; Federal Highway Administration IIJA documentation.
American Society of Civil Engineers (ASCE), 2025 Infrastructure Report Card for America's Infrastructure.
American Society of Civil Engineers (ASCE), 2025 Infrastructure Report Card for America's Infrastructure.
For Construction Pros, "2026 State of the Road Building Industry," January 2026; Federal Highway Administration IIJA documentation.
California Energy Commission, "Foreign Sources of Crude Oil Imports to California," 2024 data.
U.S. Energy Information Administration; historical Venezuelan production data.
Wood Mackenzie, "Analyzing the Petroleum Asphalt Binder Supply Chain under Energy Transition Scenarios," January 2025, commissioned by the Asphalt Institute Foundation.
Utah Geological Survey, "Oil Sands" resource documentation; U.S. Bureau of Land Management estimates (12-19 billion barrels in-place).
AetherStrike/Valkor partnership announcement, January 2026; Independent geological evaluation by Heavy Sweet LLC (2021) and NSAI verification.
Wood Mackenzie, "Analyzing the Petroleum Asphalt Binder Supply Chain under Energy Transition Scenarios," January 2025, commissioned by the Asphalt Institute Foundation.
Wood Mackenzie, "Analyzing the Petroleum Asphalt Binder Supply Chain under Energy Transition Scenarios," January 2025, commissioned by the Asphalt Institute Foundation.