Trump tariffs on Canadian oil expected to raise U.S. gasoline prices if enacted next month
A person fills up a fuel tank at a pay-at-the-pump gasoline station in Edmonton, on January 30, 2025, in Edmonton, AB, Canada.
Artur Widak | Nurphoto | Getty Images
President Donald Trump‘s threatened tariffs on Canadian crude oil imports could raise gasoline prices for U.S. drivers if the levies are enacted next month, according to major refiners and energy analysts.
Trump issued an executive order on Feb. 1 imposing a 10% tariff on Canadian energy imports to the U.S., in addition to sweeping 25% levies on goods from from Canada and Mexico. The tariffs are currently on hold until March 4 after Mexico City and Ottawa reached an agreement with the White House.
Refiners particularly in the Midwest have become reliant on Canadian crude imports despite the fact that the U.S. is the largest oil producer in the world, outpacing Saudi Arabia and Russia. This is because Canadian crude is heavier, lower quality and therefore cheaper to purchase, according to Wells Fargo analysts.
Marathon Petroleum processes a significant amount of heavy crude and expects costs to increase if the tariffs on Canadian energy go into effect, CEO Maryann Mannen told investors recently.
“We believe that the majority of that would be borne by the producer and then frankly to a lesser extent the consumer,” Mannen said on the company’s Feb. 4 earnings call. “We’re working with the administration. We’re working with agencies as well as the trade associations to ensure the right people understand the implications of these decisions.”
The U.S. imports nearly 6.6 million barrels per day of crude oil with about 60% coming from Canada, according to Andy Lipow, president of Lipow Oil Associates. Midwest refiners in particular are heavily dependent on these imports with 70% of the crude they process into diesel and gasoline coming from Canada, according to Lipow.
How much fuel prices would rise due to the tariffs depends on how Canadian producers and U.S. refiners respond. In general, a 10% tariff passed to the consumer would increase gasoline and diesel prices by about 15 cents per gallon, Lipow said in a Feb. 2 note.
Canadian prime minister candidate Chrystia Freeland, who previously served as finance minister, has warned that oil producers in Canada have alternatives to the U.S. market.
“There is a danger here for the U.S., and that is Canadians are really angry,” Freeland told CNBC in a Feb. 4 interview. “We will retaliate if we have to. You should be glad that you have us as a reliable energy supplier. We do have alternatives.”
U.S. refiners, however, have “few economically and politically viable alternatives” to Canada’s heavy crude, Mason Mendez, investment strategy analyst at Wells Fargo, told clients in a report Monday. Domestic production could replace some lost Canadian supply but U.S. crude is generally lighter than Canadian oil, Lipow said. Many U.S. refiners have physical limitations on switching totally to light crude oil, he said.
Canadian producers could divert exports from the U.S. East and West Coasts to Europe and Asia instead, Lipow said. This would force U.S. refiners on the East Coast to seek more expensive alternatives in West Africa and West Coast refiners to buy from South America or the Middle East, he said.
In the case of the Midwest, Canada does not have the logistics in place to divert all its exports away from the region, Lipow said. But they would probably try to find other buyers to the extent that they can, he said.
Traders might bid up the price of U.S. crude oil to cover any shortfall in region. Fuel prices might rise by up to 15 cents per gallon as a consequence, Lipow said. But if the tariffs cause local shortages, prices could spike by more than 30 cents per gallon.
The Midwest also does not have easy access to imports through the Gulf Coast because the pipeline system in the U.S. generally runs north to south and west to east, Lipow said.
With few alternatives, U.S. refiners will likely continue to purchase crude from Canada despite the higher cost, Mendez said. They may be able to convince Canadian producers to absorb part of the tariff rather than pass all of it on to the U.S., the analyst said.
“However, even if they split the effects of a 10% tariff, U.S. gasoline prices will likely still rise modestly,” Mendez said.
Tesla has opened orders for the Model Y Long Range RWD for $45,000 in the US. It’s the new entry-level Model Y following the design refresh earlier this year.
Since launching the updated Model Y earlier this year, Tesla has only offered the best-selling electric SUV in a single Long-Range AWD configuration.
First, it was as a fully-loaded $60,000 Launch Edition, and last month, it started deliveries of the regular Model Y AWD starting at $49,000.
As we recently noted, Tesla didn’t have much of an order backlog for the new Model Y in the US, and it has already started gathering new Model Y AWD in inventory just weeks after launching the vehicle.
Tesla even started offering subsidized financing rates on the new SUV this weekend.
Now, the automaker is starting to take orders for the new Model Y Long Range RWD
The new trim starts at $44,990 and enables 357 miles of range – an extra 30 miles over the AWD version.
However, due to its single motor powertrain, the lower-priced version is slightly slower with a 0-60 mph acceleration in 5.4 seconds rather than 4.6 seconds.
The automaker says that deliveries of the new version will start in the US in the next 3 to 5 weeks. It launched the new Model Y RWD in Europe weeks ago.
Tesla also offers a Standard Range RWD in Europe and China for even cheaper, and deliveries have already started in China.
Electrek’s Take
Tesla appears to have waited to open orders for the Model Y RWD in the US to optimize demand for the Long Range AWD.
But now it needs a cheaper model to sustain demand at the current production rate.
In the coming weeks, it will start building a mix of RWD and AWD in Fremont and Austin to
Interestingly, Tesla currently only offers the subsidized 1.99% financing rate on the Model Y Long Range AWD. I would assume that Tesla plans to take advantage of the boost in demand that the cheaper model will create.
However, US buyers probably won’t have to wait more than a few weeks before Tesla starts to offer lower interest rates on all versions, like it already does in Europe and China.
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![Big Mack, hydrogen Honda, and a ride in the Tesla Semi at ACT Expo 2025 [part 6]](https://i0.wp.com/electrek.co/wp-content/uploads/sites/3/2025/05/act-2025.jpg?resize=1200,628&quality=82&strip=all&ssl=1)
On today’s thrilling episode of Quick Charge, we’ve got some of the highlights of the 2025 ACT Expo, including the all-electric Windrose and Mack Pioneer Class 8s trucks, a hydrogen fuel sell [sic] from Honda, a fun charging surprise, and – after an eight year wait – we finally get a ride in the all-new (in 2017) Tesla Semi!
ACT Expo is North America’s premier clean truck and transport trade show – and for 2025 it was bigger than ever, with more exhibitors and more, more capable battery electric vehicles than ever. The downsides? NACFE have scored with their “messy middle” messaging, and the return of “clean diesel” talking points. We’ve got a brief rundown and links to all the details, below.
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If you’re considering going solar, it’s always a good idea to get quotes from a few installers. To make sure you find a trusted, reliable solar installer near you that offers competitive pricing, check out EnergySage, a free service that makes it easy for you to go solar. It has hundreds of pre-vetted solar installers competing for your business, ensuring you get high-quality solutions and save 20-30% compared to going it alone. Plus, it’s free to use, and you won’t get sales calls until you select an installer and share your phone number with them.
Your personalized solar quotes are easy to compare online and you’ll get access to unbiased Energy Advisors to help you every step of the way. Get started here.
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Abundance Energy, sonnen, and Energywell are teaming up to bring smarter, more resilient energy to Texas homes through a huge new virtual power plant (VPP) initiative.
By combining behind-the-meter home batteries, solar power, and advanced energy software, the trio is building a network of connected homes that can work together to support the grid. Customers who install sonnenConnect home batteries through Abundance Energy will now be part of a system that automatically stores and shares power when it’s needed most. That means lower electricity bills, better reliability during extreme weather, and a cleaner energy mix overall.
The VPP will cover all of ERCOT, with the primary focus in the greater Dallas-Fort Worth and Houston areas. Each home will have two 4.8kW/20kWh sonnenCore+20 battery units. The current customer base that will be enrolled in the VPP equals 60 MWh, and this will continue to grow each month. The VPP is already on track to replace Tesla as the largest virtual power plant in Texas by the end of 2026.
Here’s how it works: The batteries are continuously managed using Energywell’s Proton platform and sonnen’s smart VPP technology. This system monitors solar generation, customer energy use, and real-time electricity prices, and then decides when to charge or discharge each battery. Instead of just sitting idle, these batteries turn into mini power plants that can react to grid needs in real time.
And when thousands of batteries work together, they form a virtual power plant—a decentralized network that reduces the strain on the grid, especially during peak demand or power outages. Unlike traditional power plants, VPPs don’t burn fossil fuels. They use clean, stored electricity from homes and businesses, helping cut carbon emissions while keeping the lights on.
“Our mission is to empower homeowners with smarter, more sustainable energy solutions,” said Thomas Mandry, CEO of Abundance Energy. “This partnership delivers a new kind of VPP model that benefits customers and strengthens the Texas grid.”
Blake Richetta, CEO of sonnen, added, “With Abundance Energy and Energywell, we’re showing how everyday homeowners can become part of the solution to Texas’ energy challenges.”
As Texas continues to face grid reliability issues, especially in extreme heat or cold, this kind of flexible, customer-powered energy system will make homes more resilient and give customers more control over their power.
Read more: The US’s largest virtual power plant now runs on 75,000 home batteries
If you live in an area that has frequent natural disaster events, and are interested in making your home more resilient to power outages, consider going solar and adding a battery storage system. To make sure you find a trusted, reliable solar installer near you that offers competitive pricing, check out EnergySage, a free service that makes it easy for you to go solar. They have hundreds of pre-vetted solar installers competing for your business, ensuring you get high quality solutions and save 20-30% compared to going it alone. Plus, it’s free to use and you won’t get sales calls until you select an installer and share your phone number with them.
Your personalized solar quotes are easy to compare online and you’ll get access to unbiased Energy Advisers to help you every step of the way. Get started here. –trusted affiliate link*
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