What Trump tariffs would do to gas prices in Alberta | Daily Hive

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Gas prices are something many Albertans keep their eye on, and the threat of tariffs from incoming US President Donald Trump being imposed on Canadian goods may make your wallet sweat.

In addition to talking about Canada becoming the 51st state, Trump, who will take office on January 20, has proposed a 25% tariff on all Canadian and Mexican goods. If enacted, these tariffs would make life even more expensive for Albertans, particularly at the gas pump.

To get a better idea of what could happen to gas prices once tariffs are implemented, we contacted experts from Kalibrate, a data, consulting, and retail analytics platform. Suzanne Gray, a sales and services consultant, provided some insight.

“Overall, the end effect of tariffs is higher petroleum prices for Canadians—and Americans,” Gray explained.

She noted that any tariffs on crude oil from this side of the border would make it more expensive and less attractive to the US, Alberta’s largest export customer.

This would narrow the refining margin of petroleum products, known as the “crack spread,” signalling to refiners that producing refined products is not as profitable, which could lead to reduced production.

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A decrease in production in North America would likely result in higher prices for refined products. Since products refined here are traded freely across the border, after accounting for the exchange rate, prices tend to align with those in the US.

So, how might the US respond if production slows down and prices rise?

“There are several scenarios that could play out here,” Gray said.

One scenario is that American refiners in the Midwest and West Coast may continue to import Canadian crude. This would drive up the price of refined products, including fuel, both in Alberta and south of the border.

Another possibility is that US refiners turn to other countries for crude oil, which would come with increased transportation costs, again fueling prices.

“However, the effect would likely be the same as all countries are expected to have tariffs applied.”

Gray said another option for the US is to rely more on its own domestic crude oil but pointed out that US crude is lighter than the heavy crude from Alberta and would require expensive and time-consuming refinery upgrades to handle the difference.

Meanwhile, Canada’s oil production is set to hit record levels, driven by increased exports rather than domestic refining. The US remains Alberta’s largest customer, importing significant amounts of crude oil, mainly to Midwestern states like Illinois.

And with the expansion of the Trans Mountain Pipeline earlier this year, even more oil is now being exported to the US west coast.

“Changes of this nature tend to be expensive and take considerable time to implement,” Gray emphasized. “It’s not something that could happen overnight.”

Alberta Premier Danielle Smith spoke to the media earlier this week after a meeting with the incoming US president at his Mar-a-Lago resort in Florida, where Alberta’s oil and gas sector was discussed.

“I think oil and gas is going to be key to getting a breakthrough once tariffs do come,” Smith stated.

“I think if we maintain a strong partnership on energy, we can make the case about how much Americans benefit from that energy relationship. We demonstrate that we are a good trade partner and that we buy more goods and service services from America than any other nation.”