Released February 04, 2025 | SUGAR LAND
en
Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--Fossil fuel groups that were supportive of a more intense upstream agenda frowned at the prospects of disruptions to the North American supply chain triggered by tariffs imposed by U.S. President Donald Trump.
Trump, who campaigned on lowering consumer prices, acknowledged during the weekend there would be some economic pressures resulting from any tariffs on top trading partners Canada and Mexico. Those countries represent the No. 1 and No. 2 crude oil exporters to the United States, with Canada accounting for about 60% of total exports.
Mike Sommers, the head of the American Petroleum Institute (API), said Sunday that his group would continue to work with the Trump administration on "full exclusions that protect energy affordability for consumers."
Trump enacted a 25% tax on imports from Canada, but opted for a 10% tariff on Canadian energy imports. Much of the midstream infrastructure in North America is integrated, with the oil fields in Alberta tied to the Great Lakes states through a series of pipelines such as the Lakehead system from Enbridge.
Many of the refineries in the Great Lakes region are designed to process the heavier type of crude oil found in Canada, and infrastructure is such that finding alternatives would be complicated.
"Energy markets are highly integrated, and free and fair trade across our borders is critical for delivering affordable, reliable energy to U.S. consumers," Sommers said.
Tariffs on Mexico were paused for one month after President Claudia Sheinbaum agreed to send members of the national guard to the border to help stem the flow of illicit drugs.
U.S. consumers can nevertheless expect an increase in prices as the extra cost for imports trickles down. Market prices were already in bullish territory before the opening bell rang in New York City. West Texas Intermediate (WTI), the U.S. benchmark for the price of oil, was up about 2% to trade in the mid-$70 range. Reformulated Blendstock for Oxygenate Blending (RBOB), the futures contract for wholesale gasoline prices, was up 3.5% early Monday.
RBOB is among the major factors that determine what consumers pay at the pump. Analysis published Monday from French multinational financial firm BNP Paribas said it expected the resultant downturn in refinery runs to dampen some of the tariff impact on WTI, though tariffs would certainly result in an uptick in retail gasoline prices.
Meanwhile, Henry Hub, the U.S. benchmark for the price of natural gas, was up 8.5% in pre-market trading on Monday. Despite its own abundant reserves, the United States relies on Canada for about 9% of its natural gas.
Like Sommers at the API, Karen Harbert, the president and chief executive officer at the American Gas Association, reminded the Trump administration that North American trade arteries are heavily interconnected.
"Energy security is national security, and our highly integrated North American natural gas delivery system is critical to ensuring our nation's safety and fueling our homes and vital industries," she said.
Canadian Prime Minister Justin Trudeau, who is stepping down due to internal disputes over the tariff response, said he spoke recently with Mexican President Claudia Sheinbaum, though announced few bilateral specifics.
Canada had threatened to pull U.S.-made alcohol from its shelves and respond with tit-for-tat, dollar-for-dollar tariffs on U.S. goods. Before the pause, Sheinbaum was widely expected to follow suit with her own announcements later this week.
With tariffs, Trump is tearing up the revised North American Free Trade Agreement that he brokered during his first term. Ostensibly imposed to curb the flow of illegal immigrants and illegal drugs, trade restrictions can prop up domestic industries as foreign goods become too expensive, though it's largely the importer's consumer and businesses that suffer the most.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
Trump, who campaigned on lowering consumer prices, acknowledged during the weekend there would be some economic pressures resulting from any tariffs on top trading partners Canada and Mexico. Those countries represent the No. 1 and No. 2 crude oil exporters to the United States, with Canada accounting for about 60% of total exports.
Mike Sommers, the head of the American Petroleum Institute (API), said Sunday that his group would continue to work with the Trump administration on "full exclusions that protect energy affordability for consumers."
Trump enacted a 25% tax on imports from Canada, but opted for a 10% tariff on Canadian energy imports. Much of the midstream infrastructure in North America is integrated, with the oil fields in Alberta tied to the Great Lakes states through a series of pipelines such as the Lakehead system from Enbridge.
Many of the refineries in the Great Lakes region are designed to process the heavier type of crude oil found in Canada, and infrastructure is such that finding alternatives would be complicated.
"Energy markets are highly integrated, and free and fair trade across our borders is critical for delivering affordable, reliable energy to U.S. consumers," Sommers said.
Tariffs on Mexico were paused for one month after President Claudia Sheinbaum agreed to send members of the national guard to the border to help stem the flow of illicit drugs.
U.S. consumers can nevertheless expect an increase in prices as the extra cost for imports trickles down. Market prices were already in bullish territory before the opening bell rang in New York City. West Texas Intermediate (WTI), the U.S. benchmark for the price of oil, was up about 2% to trade in the mid-$70 range. Reformulated Blendstock for Oxygenate Blending (RBOB), the futures contract for wholesale gasoline prices, was up 3.5% early Monday.
RBOB is among the major factors that determine what consumers pay at the pump. Analysis published Monday from French multinational financial firm BNP Paribas said it expected the resultant downturn in refinery runs to dampen some of the tariff impact on WTI, though tariffs would certainly result in an uptick in retail gasoline prices.
Meanwhile, Henry Hub, the U.S. benchmark for the price of natural gas, was up 8.5% in pre-market trading on Monday. Despite its own abundant reserves, the United States relies on Canada for about 9% of its natural gas.
Like Sommers at the API, Karen Harbert, the president and chief executive officer at the American Gas Association, reminded the Trump administration that North American trade arteries are heavily interconnected.
"Energy security is national security, and our highly integrated North American natural gas delivery system is critical to ensuring our nation's safety and fueling our homes and vital industries," she said.
Canadian Prime Minister Justin Trudeau, who is stepping down due to internal disputes over the tariff response, said he spoke recently with Mexican President Claudia Sheinbaum, though announced few bilateral specifics.
Canada had threatened to pull U.S.-made alcohol from its shelves and respond with tit-for-tat, dollar-for-dollar tariffs on U.S. goods. Before the pause, Sheinbaum was widely expected to follow suit with her own announcements later this week.
With tariffs, Trump is tearing up the revised North American Free Trade Agreement that he brokered during his first term. Ostensibly imposed to curb the flow of illegal immigrants and illegal drugs, trade restrictions can prop up domestic industries as foreign goods become too expensive, though it's largely the importer's consumer and businesses that suffer the most.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
