Travel News
US Drivers May See Pump Prices Jump 15 Cents on Trump Tariffs - BLOOMBERG
(Bloomberg) -- American drivers may see fuel prices jump by around 15 cents a gallon from Donald Trump’s move to impose tariffs on Canadian and Mexican supplies, according to one oil analyst.
The US is set to impose a 10% tariff on imports of oil and refined products from Canada, threatening to upend American refining and fuel markets accustomed to importing about 4 million barrels a day of Canadian crude. Mexico has also been under the threat of US trade restrictions, though Trump on Monday delayed a 25% tariff on Mexico for a month.
“A 10% tariff passed through to the consumer will raise gasoline and diesel prices about 15 cents per gallon,” Andy Lipow of Lipow Oil Associates said Sunday in an emailed note. “The extent to which the consumer is affected depends on where the consumer lives.”
The West Coast — already the most expensive gasoline market in the US — could see prices rise 20 cents a gallon, Lipow said. If Canadian oil producers divert supplies from the Midwest and create localized shortages, “prices could spike well over 30 cents a gallon.”
The tariffs come as US refiners are cutting output for maintenance, which means less domestic product is available to replace any curtailed Canadian supply.
Massachusetts, Vermont and New Hampshire rely on Canadian gasoline and diesel imports, while western Pennsylvania, Montana and Washington state rely on Canadian crude oil supplies, Lipow said. A major supplier to those Northeast markets, Irving Oil Ltd., has already told customers in New Hampshire that it will raise propane prices by the cost of Trump’s tariffs.
Gasoline prices at US pumps averaged $3.10 a gallon last weekend while diesel was $3.70 a gallon, according to data from the American Automobile Association.
Most US price increases are unlikely to be immediate, according to Pavel Molchanov, a managing director for energy research at Raymond James in Houston.
“The rule of thumb is that it takes three to four weeks between an oil price movement and a corresponding change in prices at the pump,” he said. “That means drivers should notice it toward the end of February.”
Retail prices in regions that rely more on Canadian oil supply could see fuel price spikes sooner. In northeast states like Maine, the majority of fuel retailers buy their product on spot markets priced at the New York Harbor. If tariffs raise prices on that key pricing hub, gas stations would almost immediately pass the cost through to consumers, according to a retailer in the region.
The tariff effect is already showing up in futures markets. NYMEX gasoline futures rose as much as 13.2 cents on Monday, the largest intraday move since March, to touch almost $2.17 a gallon.
