The Trump Administration's tariffs on Canada are likely to come with an increase in gas prices. How high will they get? And what areas could be the most affected by an increase in prices from Canadian oil?
The Midwest imports roughly 4.5 million barrels of oil from northern neighbors per day. Oil and gas analyst Patrick De Haan of Gas Buddy says Minnesotans and other states in the Great Lakes, the Midwest and the Rockies regions won't feel an impact immediately, but it is possible.
"The tariffs are on oil. That oil from Alberta does flow down into areas like Minnesota, but it takes over a week for that to get here and then to be refined takes another week or so," De Haan explains. "So all in all, generally speaking, the impact will probably be fairly delayed."
According to De Haan, it should be a couple weeks before prices rise assuming the current tariffs stick.
"I would estimate that the impact eventually could be 5 to 15 cents a gallon," he says.
While Commerce Secretary Howard Lutkin hinted there could be a resolution soon, in the meantime, drivers should prepare for a jump at the pump.
"As I mentioned, it does take a week or two for that oil to be put through a refinery and then sits again. So the impact would probably be subdued," De Haan adds.
For places in South, Southeast, Mid-Atlantic, Southwest and West Coast that don't depend as much on Canadian oil, it shouldn't affect pricing much.
Lutnick said the 25% tariff levied on Canada and Mexico would remain, the relief under consideration would eliminate the 10% tariff on Canadian energy imports, such as crude oil and gasoline according to a report in Reuters Wednesday afternoon.
Oil prices dropped $2 after U.S. crude stock build, a previously announced output increase from OPEC plus the news on Trump tariffs.
Prices usually rise this time of year anyway, De Haan explains noting that demand always heads up as the country gets closer to spring.
For those that think the Trump campaign slogan of "drill baby, drill" and just use U.S. oil, De Haan explains why that doesn't work, noting in his blog that the infrastructure just isn't there to flip that switch.
"Our pipeline infrastructure simply isn’t designed to accommodate such a dramatic shift," he says. "The network that currently serves refineries across the Midwest, Great Lakes, and Rockies was specifically constructed to deliver Canadian heavy crude, and these pipelines only flow in one direction—south."
He also notes that any oil coming from Texas or even North Dakota would require billions of dollars and years of planning just to move the oil to refineries.
De Haan also makes a point about the "type" of oil we get from Canada being a heavier grade, and the nearly every Midwest-Great Lakes refinery isn't set up for processing the lighter grade of oil the U.S. typically produces (and exports).