When President Trump imposes tariffs on Canadian oil, the largest refineries in the Midwest make an unpleasant choice. It pays more to slash production, or crude oil that transforms into gasoline and diesel.
If Trump is stuck to the 10% rate announced this month, both options are threatening to raise prices at the pump.
It is not clear whether the tariffs will take effect after Trump decides to rescue it until at least early March.
But the refinery, built around 1889 on the South Shore of Lake Michigan near Chicago, is a reminder of how difficult it is to cancel trade relations that date back decades.
Trump, like many American leaders before him, longs for a kind of energy independence that says experts are unrealistic and don't benefit individuals or the oil industry. It seems there is.
“We don't need their oil and gas,” Trump said last month, referring to Canada. “We have more than anyone else.”
I can't get excited about this. No matter how much oil the US pumps, or already the world's leading producer, its refineries are designed to run with a blend of different types of oil. Many cannot work well without dark, dense, and inexpensive crude oil that is difficult to find domestically.
Canada is washed away with that oil known as heavy crude oil. And this type of facility, BP's refinery in Whiting, Indiana, was built around its supply.
Companies spend billions of dollars and have little reason to restructure their systems for fleeting trade policies. Needless to say, there is uncertainty about the global demand for gasoline and diesel. Some experts believe it could peak over the next decade as more people buy cars and trucks that run on natural gas and other fuels.
“The Whiting Refinery” was a retiring refinery executive who worked for several years in the 1980s and '90s, said:
Whiting, a facility with tanks, towers and more than 800 miles of pipelines, is one of Canada's most dependent on oil. On any day, between 65% and three-quarters of the crude that flows through it is the dark, viscous variety found in Alberta oil sands. The rest can be light, and many of them can come from Texas, New Mexico and other US.
BP allows you to fine-tune recipes, but that's it. Too few viscous things will require companies to cut down on the production of fuel that powers cars, trucks and planes. Refineries usually make enough gasoline in a day, burning more than 7 million cars, or about 3% of gas-powered vehicles on American roads.
The oil and gas industry, one of Trump's biggest supporters in last year's election, has urged energy to be exempt from Canada's tariffs, saying taxes could raise pump prices. Masu. (During the campaign, Trump pledged to cut people's energy bills by more than half.)
“It's not as easy as switching things around,” said Chet Thompson, CEO of American Fuel & Petrochemical Manufacturers at the Trade Association.
In signs that he heard of the industry that Trump gave his campaign more than $75 million, he reduced planned tariffs on Canadian energy imports from 25% to 10%.
At that level, some consumers may see gas prices rise a few cents, but analysts say that many of the additional costs will be due to the fact that they will do business with Canadian oil producers. It said it will be absorbed by US refiners who are effectively trapped in. The impact could be even more severe if Canada retaliates against Trump's trade policy, such as by imposing export taxes.
Even at 25%, simultaneous tariffs on Mexican oil are widely expected to be non-destructive on this side of the border as the US reduces Mexican oil and imports Gulf refineries that use it. It's there. Midwest.
Hours before the tariffs came into effect, Trump put it on hold for at least 30 days in exchange for step-up border security measures from Canada and Mexico.
White House spokesman Kush Desai said in a statement that the deal demonstrated the president's “commitment to using every lever of executive power to put Americans and America first.”
Amidst uncertainty, Kelsi Thomas, a 23-year-old special education classroom assistant, was trying to understand what the North American trade war meant to her. Gasoline prices – $3.10 per gallon, the love of local love outside Chicago last week – was the best.
“He was supposed to lower prices,” she said of Trump.
The sophisticated companies have reported year-end revenue in recent weeks, trying to reassure investors that they are ready.
“Tax studies were at the top of our list of things we were doing,” said Mary Anne Mannen, CEO of the fuel-building giant marathon oil, Wall Street analyst last week. He spoke to.
“It's likely,” Mannen added. I believe that the majority of this will ultimately be borne by producers and, frankly, consumers will be borne by the lesser, consumers. ”
The day after Trump said he was holding taxes on hold, Marathon Petroleum stock price rose nearly 7%.
BP invited reporters and photographers to tour the Whiting refinery last week, but cancelled a planned interview with the refinery's top executives.
In a statement, executive Chris Delafranco said he “plans all the scenarios.”
Like many other things these days, people's feelings about the tariff outlook often track how they view the president himself.
Connie Salas, a Republican who owns a flower shop in Whiting, has filled her delivery truck with the exception of the risk of having to pay immediately for plants such as Azaleas and Cyclamen.
“The fact that prices range from $3 marks is no big deal if they go up to $3.50,” Saras, 77, said of gasoline. “It's fine for me what we have to do to make the country better.”
Humberto Martinez, a retired Whiting refinery worker, has expressed more concerns about Trump's trade policy. He voted for former Vice President Kamala Harris.
“My pension from BP won't rise,” said Martinez, 75. “What scares me is that I can't afford the same lifestyle.”
