Trump has ‘costly’ option to shut Canadian oil out of U.S. refineries #CanadaFinance

Gas prices fell on average across most Canadian cities over the past week, dropping 1.8 cents per litre of regular fuel, according to data from Kalibrate.

The slight relief at the pumps follows four straight weeks of rising prices.

Fort St. John, B.C. saw the biggest increase between Jan. 16 and Jan. 23, adding 12.8 cents per litre, followed by Timmins, Ont., and Peterborough, Ont. The biggest discount this week was in Edmonton.

Gas prices were up 3.5 per cent year-over-year in December, according to consumer price index data released on Tuesday. On a monthly basis, Statistics Canada says gas prices fell 0.6 per cent. Looking back to November, the agency says retail sales at gas stations increased 0.7 per cent, the first positive print since last April.

U.S. President Donald Trump’s standing threat to impose an up to 25 per cent tariff on Canadian goods continues to cast uncertainty over the long-term trend for gas prices on both sides of the border. The tariff is due to include a key grade of Canadian crude needed at major U.S. Midwest refineries.

En-Pro International chief petroleum analyst Roger McKnight says these facilities would have to replace 600 million litres per day with supply that has the same chemical formulation as Western Canadian Select (WCS).

“As there are no pipelines to bring crude up from the Gulf, all refined products (gasoline and diesel) will have to be brought in by rail or by tanker truck, the costs of which are astronomically higher than by pipeline,” he wrote in a recent blog post.

McKnight says Trump could order a retooling of all refineries that only process WCS.

“It may be costly but if forced to, the Americans can do it, and fast,” he added. “If a reconfiguration were to allow U.S. shale oil to be the only refinery input product, then any imports of any crude from anywhere would not be needed because the U.S. is the largest crude oil producer on the planet. If this were to happen, Canada’s only crude oil customer will be just a footnote in the history books.”

According to the Canada Energy Regulator, over 97 per cent of Canadian crude oil exports were destined for the U.S. in 2023.

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