Consumer Alert: Petroleum expert warns tariffs could wallop your wallet
ROCHESTER, N.Y. – On Monday, The White House announced its pausing tariffs on Canada for 30 days, but tariffs are not off the table. This Consumer Alert takes a look at how tariffs on Canada may wallop your wallet.
Consumers would certainly feel the pain of tariffs on Canada at the gas pump. More than half of the petroleum products the U.S. imports come from our neighbors to the north. The two countries have a network of refineries and pipelines that complement each other, coupled in crude, and partnered in petroleum. This tariff tiff is a big deal. And nowhere will the pain be felt more than here in the northeast because of the area’s dependence on Canada’s petroleum products.
In March of 2022, $4 gas was a bargain. Long lines snaked through the parking lot of Costco as folks waited to fill up. That’s because the average price of a gallon of gas in the Rochester area was $4.33. While the trump tariffs may not drive prices that high, experts do predict pain at the pump.
“Not only is it oil that is flowing from Canada down to refineries that are generally in the Great Lakes, Midwest, and Rockies, but it’s also refineries that are also sending refined products into areas like New England and Western New York,” said Patrick De Haan, head of petroleum for Gasbuddy. So, this is going to be a big bite to those in upstate New York.”
The U.S. imports four million barrels of crude oil per day from Canada making our neighbors to the north the biggest source of foreign crude oil in America. And that doesn’t include the refined petroleum products imported from Canada.
“This is something that’s going to impact not only gasoline but also jet fuel, heating oil, diesel, propane – just about everything to the tune of 10 to 25 cents a gallon for the next week or so or as long as these tariffs remain implemented,” said De Haan.
The question is why. Since 2018, the U.S. has been the biggest oil producer in the world. But we don’t produce the right kind of crude oil. Two decades ago many U.S. refineries invested in equipment that processed heavy low-quality crude. Then the fracking boom hit. That crude is a light higher quality crude – crude oil that many American refineries can’t process. So, the U.S. exports light high-quality oil and imports low-quality crude, much of it from Canada. That means for good or ill, the U.S. and Canada are inextricably tethered in trade.
“To act like the U.S. is the only country, and all our oil can just stay here and solve the world’s problems is certainly a very simplistic understanding of things,” said De Haan.
The president promised a 10% tariff on petroleum products from Canada, and 25% on other products. Again, that’s on pause for now. But experts say a prolonged tariff fight could have a devastating effect on the economy.