Tariffs And Unexpected Gas Price Surge
Gas price increases usually involve shortages from Russia, Venezuela, Mexico, and OPEC+. Tariffs have not been a trigger, that is, until now. Tariffs of 25% on imports from Canada and Mexico will hit crude supply hard, particularly with imports from Canada.
Gas price increases may be as low as $.25 per gallon of regular early. If the tariff period is short, that will hold. It is unlikely that Canada could decrease the price of crude oil to keep it flowing to the US, and gas prices would be steady. However, oil companies cannot have margins that are destroyed for a long time.
Canada Oil
Bloomberg paints a broader picture. “Some 40% of the crude oil processed at US refineries is imported, and Canada and Mexico — the No. 1 and No. 2 foreign suppliers of oil to the US, respectively — together deliver more than two-thirds of that oil.”
Gasoline is a medium part of most household budgets, but the financial dent will be significant for people who need to drive long distances or for the lower middle class or poor. Disposable income is a large GDP driver, so the effects will ripple.
US Production Record
While the US produces more crude than any nation globally, much of it is exported. According to the US Energy Information Administration, America exports oil to 173 nations. It is not as if that flow can be reversed. Although huge, US refineries are not set up entirely to refine gasoline.
Gas prices are going up. No one knows how much and when.
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