Posted on 03/05/2025 9:32:51 AM PST by Miami Rebel
The ink is barely dry on Trump’s 10% tariff on Canadian energy, and already, fuel prices are bracing for impact. As Gasbuddy's Patrick De Haan puts it, “The real-world impact of tariffs won’t be to shift refining patterns, instead, it will be to add costs throughout the system.” Translation? Expect to shell out more at the pump.
So why can’t U.S. refiners swap out Canadian crude for American oil? Simple: decades of infrastructure, billions in investment, and the laws of physics. The pipeline system serving the Midwest, Great Lakes, and Rockies was built to transport Canadian heavy crude south—not the light, sweet variety coming from Texas or North Dakota. That’s like asking a downhill skier to suddenly ski uphill.
Then there’s the small issue of refinery compatibility. The facilities designed for Canadian heavy crude aren’t just being picky—they literally can’t process light U.S. shale oil without a multi-billion-dollar retrofit. As GasBuddy explains, it’s like filling a diesel truck with regular gasoline. Could it be done? Sure, if you don’t mind catastrophic failure.
Where will it hurt most? According to Gas Buddy, the Northeast is first in line for sticker shock, as it depends heavily on refined products from Canada. Prices there could spike 20-40 cents per gallon by mid-March. The Midwest and Great Lakes regions, where Canadian crude feeds local refineries, will see increases of 5-25 cents per gallon in the coming weeks. The Rockies won’t be spared either, with hikes of 10-20 cents expected.
Meanwhile, oil prices have already dropped on the news, with WTI at $67.31 and Brent at $70.27—a sign that traders anticipate demand destruction. But don’t celebrate just yet. Those lower crude prices aren’t translating to savings at the pump. Instead, consumers are about to get caught between tariffs, refinery bottlenecks, and seasonal price hikes.
(Excerpt) Read more at oilprice.com ...
He/She/It does seem to me to be a one-trick pony on this forum.
There are a few things I disagree with Trump on. But overall, a course correction was necessary. We were already deep into insanity...INSANITY! The trans thing, mutilating helpless children, government agencies financing NGO’s to sue those same agencies to get the courts to force enforcement of damaging laws. And, by the way, if an NGO vanishes after its government funding is withdrawn was it really an NGO? No it was part of a shadow government, unelected and working against the interests of the American people. I’m willing to put up with a barrel of financial pain if it achieves a course correction back towards national sanity. And those things I disagree with? They’ll work their way out one way or another. Overall, I’m happy with Trump.
Canada has been subsiding their lumber industry for decades. Oil is a commodity and price is the basic factor. Saw oil dropped 3 today and production went up 3 million barrels, do you think we are going to pay more for Canadian oil than our own or Some other producer?
Nice try though, maybe your argument will work on someone else.
Heck, what would be the expected extraction cost for most new wells, anyway? I thought I’d read it was up over $60 / bbl anyway, though I could be wrong about that.
Depends on the extraction cost.
Oil Price can have contradictory articles about future pricing on the same day. But, at least they will be from two different “analysts”. I gave up on them before I ever figured out which writer was more often correct.
Oil Price can have contradictory articles about future pricing (COMMA!) on the same day. But, at least they will be from two different “analysts”. I gave up on them before I ever figured out which writer was more often correct.
What I do know is that my local farmers, already screaming about being pinched between high costs and low commodity prices, are not very happy about the tariffs and retaliatory tariffs, which together stand to worsen both ends. A lot of the farmers are barely hanging on anyway, and higher prices at the stores don’t get reflected back to them. Wage increases in the job market (theoretically a long term benefit of tariffs) don’t help them either.
One of the problems with a trade war is that you end up essentially with more money sucked out of the private economy and into gov’t. Whups, that’s not a result conservatives can be good with...
What the solution is, besides more gov’t subsidies (ugh), I don’t know.
Part of the root (not a pun!) problem is that farming techniques worldwide are catching up with us. (Remember when the Soviets had food shortages in the stores? Now Russia is a big exporter, competing with our farmers.)
COVID was very good at getting gas prices down. Gas prices rose under Trump until COVID hit. Go back and look at the data.
What Trump did accomplish was getting production up, but worldwide demand and a good economy ramped prices up, pre-COVID.
This time around, we will see.
Uh, you missed the part about what the refineries are built for. If our refinery needs heavy oil, or an optimized input of heavy and light oil, more of our light shale oil (under more demand in your scenario!) doesn’t do it much good.
Not a oil wholesaler but I think they made tar refineries due to Venezuela oil Biden pushed. I think they can refine everything and the more we produce the better. It is a basic comodity which comes down to price, price, price. Why would America buy $80 oil when we can buy $65 domestic?
Unfortunately, not without very costly "adjustments" at the refineries. Your statement is almost like saying that, say, a diesel engine, can run on gasoline or 20-W50 oil. You should spend some time reading industry rags. (Real industry magazines, not the ones more directed at distribution to a more general readership.)
Here's one example from a popular mag that appeals to both readerships (but doesn't do deep dives into the actual chemical engineering). It's an article I just read regarding the difficulties of success of potential Trump (renewed) sanctions on Iranian oil. It is not the main focus of the article, but note the part about Iran producing oil from different fields than it used to, to optimize its product to the "input" that best suited Chinese refineries.
When Iran exported to over 20 countries in 2018 before sanctions, it supplied various crude types. As exports shifted to China, Chinese refineries required specific crudes, forcing Iran to reduce production and exports.
Since then, Iran developed fields producing oil suited to Chinese refineries. Thus, some of the factors that caused the 2019 decline in production and exports no longer exist.
https://www.worldoil.com/magazine/2025/february-2025/columns/oil-and-gas-in-the-capitals-can-president-trump-reduce-iran-s-oil-exports-significantly/
Side note: Iran is interesting because it still has lots of oil in various grades coming from different fields. The US has used up most of its readily extractable oil in many grades, but DOES have a lot of light grade oil, in varying difficulty(s) of extraction (cost) depending on where it is. That's one reason we both import a lot of oil and export a lot of oil (and refined products.) Neglecting the refined products for a moment, essentially we trade a lot of light oil for heavy oil, in the global market, as that's cheaper than modifications at the refineries.
One most also keep in mind that refineries typically produce a wide range of products. For example, we consume vast quantities of asphalt. It's pretty hard (ie., costly) to produce a lot of asphalt from shale oil.
Keystone is interesting because a little mentioned feature of it was to pipe light shale oil to Canada. There it'd be mixed with heavy Canadian product, making for an easier to pipe mix (than the heavy Canadian product), optimized for our refineries, to pipe to them. (Yes, even the pipelines get optimized for, essentially, the weight and composition of the oil sent through them.)
Side note: “The devil is in the details”.
I used to work for a medium size (300+ employees at our peak) manufacturing company. I had to wear a lot of hats, including design engineer, sourcing engineer, QC, etc. A new shipment of a plastic part would come in with a performance problem, and hopefully I would catch it. My report to my boss would say, perhaps, “Failed low temp. flexure durability test.” Huge uproar, as production would be delayed, making for an unhappy customer, an unhappy boss, and I get to pursue the issue with the supplier who formed the part, who then has to investigate their processes and incoming materials. Maybe the part was made from bulk plastic pellets, process reports look fine, and then it goes back to the pellet vendor and perhaps even all the way back to the refinery. Everybody’s unhappy except the refiner who may ignore a problem if it is a tiny fraction of their sales. Plastics are often blends of various materials - the base material, other oils and resins (such as to modify brittleness or durometer or tensile strength), material for UV resistance... “What?! What do you mean one of the plasticizers is off spec? How’d that happen?!” I’d only just scrape against the chemical engineering side of it - no one can’t be a freaking expert on everything - I was (and am) more of a jack of all trades, very good at a few things...
Then there were the problems that accrued when the EPA banned the venting of volatiles used in producing some of the parts we used. OMG, we never quite met the excellence of our original product in some cases. :-(
I went on Gas Buddy early this morning to advise my wife where to get gas today, when she goes to town to work. All the prices that changed this morning (ie., within the last 2 hours) are up about 18-20 cents. More should come in a little later. (Not many people are out @ 5 a.m.!)
I wrote a book on this. If you are right Canadian oil is already discounted for added expense to refine just like Venezuela and Brazil. Oil prices are already dropping and gas will follow:
https://tradingeconomics.com/commodity/crude-oil
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