The United States has no alternative crude oil supplier that could replace Canada, energy investor Eric Nuttall told Bloomberg this week, arguing this fact would put a quick end to the tariff war.
“They have no alternative. They can’t truck it or barge it. And so, their reliance on Canadian oil potentially gives us enormous strength going forward. And so, I really hope this is going to be a wake up call for energy policymakers, irrespective of political leanings, irrespective of party, to put the past behind us and build out incremental takeaway capacity both to the west coast and east coast,” Nuttall, who is among the most prominent oil bulls in the business, told the media outlet.
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The comments chime in with the dominant opinion among analysts that the tariffs on Canadian oil, even though they have a lower rate than the tariffs on all other Canadian imports, would hurt the U.S. more. The focus of the argument is that costlier Canadian crude imports would result in lower run rates in Midwestern refineries that are the most dependent on imports from the north. This in turn would shrink fuel supply and boost prices at the pump—the opposite of what Trump promised on the campaign trail.
Meanwhile, “The lessons that we take away from this and the damage I think that has been done to the relationships, to the view that we’re friends and closest trading relationships…we really need to evaluate that going forward,” Nuttall told Bloomberg, highlighting perhaps the biggest risk that President Trump took with the tariffs, of undermining a traditionally strong relationship with Canada.
On a more pragmatic note, Nuttall suggested that “And from an energy perspective, it makes it a necessity to make it a national priority to build out more pipelines both to the east coast and west coast, to diversify the customer base. If we had the ability to circumvent the U.S. refineries, we would not be in this situation as a country.”
By Irina Slav for Oilprice.com
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