The U.S. has had lower and more stable gasoline prices than other countries in recent years due to its high domestic production, and from getting much of its oil from Canada. That should be changing with the steep tariffs that the Trump administration announced Saturday and that which should start Tuesday. It includes a 25% duty on all imports from Mexico and most goods from Canada (with a 10% exemption for energy-related items such as crude oil), and an additional 10% tariff on Chinese goods imported into the U.S. That 10% tariff exemption on Canadian energy-related supply isn’t expected to cushion the tariff blow with this NAFTA partner.
The U.S. imports about 4 million barrels per day (bpd) of Canadian oil, 70% of which is processed by refiners in the Midwest. It also imports over 450,000 bpd of Mexican oil, mainly sent to refiners concentrated around the U.S. Gulf Coast. Tariffs on those imports mean higher costs for making finished fuels like gasoline, much of which is likely to be passed along to U.S. consumers, according to the U.S. Energy Information Administration (EIA).
In 2022, 52% of oil imports came from Canada and 10% from Mexico, the two largest import countries. In that same year, 12% of U.S. petroleum exports (including crude oil) went to Mexico and 9% went to Canada, followed by 7% to China, 6% to South Korea, and 6% to The Netherlands, reports EIA.
The EIA, and AAA Fuel Prices, report that gasoline and diesel prices typically go up in February on a seasonal basis, rising up even more in the summer months. As of Sunday, the national average price at gas stations for gasoline is $3.098 per gallon and $3.154 a year ago; diesel comes in at $3.660 per gallon on Sunday and $3.938 a year ago, according to AAA Fuel Prices. Monthly reports from EIA show gas prices at $3.328 for February 2024 and $3.542 for March 2024.
Tesla may feel the pinch
The tariff will likely bring tensions and conflicts between the U.S. and some of its partner countries. Canada is expected to be particularly heated with the close connection the U.S. and Canada have in transporting and refining oil between the nations; and in selling oil to each other.
Chrystia Freeland, Canada’s former finance minister and current Liberal Party leadership contender, has proposed a bold countermeasure: slapping 100% tariffs on select American goods, including Teslas, in direct response to President Trump’s threatened tariffs on Canadian and Mexican imports, reports Business Today.
Freeland also admitted her personal concerns about Tesla CEO Elon Musk’s campaign contributions to Donal Trump and the leadership role he’ll be playing in making U.S. administrative agencies more cost effective. Tesla vehicles sold in Canada are mainly manufactured in the U.S. and China. Imposing tariffs is expected to hike Tesla vehicle products for buyers in Canada, which could benefit EV competitors. Tesla Model Y and Model 3 have played a dominant role in Canadian EV sales.
Automakers are feeling quite anxious about the tariffs halting vehicle production in North America, and raising their costs substantially. Flavio Volpe, CEO of the Automotive Parts Manufacturers’ Association, says the tariff rate coming Feb. 4 is “15-per-cent higher than anybody’s profit margin,” according to Automotive News.
Transformative Pathways for U.S. Industry: Unlocking American Innovation
This U.S. Dept. of Energy study identifies and explores transformative pathways and how they can be potentially pursued together to chart a course to an industrial transformation. It looks at industrial sectors in various industries along with agriculture to study the greenhouse gas (GHG) emissions, power sources, efficiency, and other issues shaping the near future for each of them. Key findings include: For GHG emissions by industrial subsection, the two leading emitters have been agriculture, forestry, fishing and hunting; and chemical products.
Agriculture, forestry, fishing and hunting includes animal production and aquaculture; crop production; forestry and logging; fishing, hunting, and trapping; and support activities for agriculture and forestry.
The analysis of the chemical sector primarily focused on nine high-volume, energy- and emissions-intensive basic chemicals: ethylene, propylene, butadiene, benzene-toluene-xylene (BTX), chlor-alkali (co-production of chlorine and sodium hydroxide), soda ash, ethanol, methanol, and ammonia. Together, these chemicals account for roughly 40% of total U.S. chemicals subsector greenhouse gas emissions in 2018. The remaining 60% of subsector emissions come from the production of hundreds of other chemicals. This analysis considers cross-cutting measures to decarbonize these chemicals but does not evaluate process-level decarbonization pathways.
For the oil and gas sector, most energy use is for motor drives to run drilling equipment, pumps, and compressors, whereas within mining, energy use varies significantly from site to site. Approaches to address fugitive methane emissions are a critical need in oil and gas, as methane has high global warming potential, and a substantial leakage of methane exists throughout all stages of oil and gas extraction and from underground coal mining. Additional methane is leaked from wastewater treatment plants and from dairy, poultry, and swine farms. Captured methane could be used for energy, offsetting natural gas demand.
For those interested in tracking this sector, you can go to Oil & Gas Watch Database. It’s mission is: ‘Spotlighting the Environmental Impact of Oil, Gas, and Petrochemical Expansion.’
Tracking Elon Musk’s Politics and Power
Another information resource is a fairly new tracker, with this one taking a careful look at what Musk is doing in his role with the Trump administration, as head of X, Tesla, SpaceX, and Starlink, and other significant activities. This Tech Policy Press tracker was first published on August 11, 2024, and is updated intermittently.
