By volume, we are reasonably close. But by grades of oil US refiners need, we aren’t. Here are the details.
Understanding Oil Imports
The American Fuel & Petrochemical Manufacturers (AFPM) addresses the question How much oil does the United States import and why?
- The amount of crude oil U.S. refineries process greatly exceeds U.S. crude oil production. The United States is producing a record amount of crude oil (~13.4 million barrels per day), while U.S. refineries need about 16.5 million barrels per day to maintain current production levels. [Mish Note: On a volume basis we produce about 81 percent of what we need but …]
- About 60% of the crude oil that runs through U.S. refineries is extracted right here at home.
- Many refineries need heavier crude oil to maximize flexibility of gasoline, diesel and jet fuel production. Today, most crude oil produced in the United States is light, including much of what’s produced in the Permian and Bakken. Light crudes are not good replacements for the heavy crude oil we get from Canada and Mexico.
- Re-tooling refineries to process solely U.S. crude oil (light crude) would cost billions — a risky investment that would take decades to permit, construct and eventually pay off.
- We lack the infrastructure (like pipelines) needed to cost effectively supply U.S crude oil and refined products to every region. Even if the economics of re-tooling our facilities
Why are tariffs and taxes on oil imports bad for the United States?
- Import tariffs and taxes would increase the cost of producing gasoline, diesel and jet fuel and compromise our energy security.
- Raising the cost of heavier crude oil would increase the cost of manufacturing fuel.
- Forcing refineries to process oil they weren’t designed for would cause them to reduce production and potentially shut down.
- Tariffs on North American imports could spur retaliatory actions and make our exports less attractive.
Why do U.S. refineries run on heavier crude oils that we need to import?
- Long before the U.S. shale boom, when global production of light sweet crude oil was declining, we made significant investments in our refineries to process heavier, high-sulfur crude oils that were more widely available
in the global market. - These investments were made to ensure U.S. refineries would have access to the feedstocks needed to produce gasoline, diesel and jet fuel. Heavier crude is now an essential feedstock for many U.S. refineries.
- Substituting it for U.S. light sweet crude oil would make these facilities less efficient and competitive, leading to a decline in fuel production and higher costs for consumers.
- Refineries run on a mix of crude oils in order to run efficiently and maximize outputs. More than 70% of U.S. refining capacity runs most efficiently with heavier crude.
- Because heavier crude is more difficult to process, it tends to trade at a discount to light crude.
All of the above points are from the AFPM. Here are some of my thoughts.
Drill, Baby, Drill?!
Shale oil is getting lighter and lighter as time passes, making it even harder to use in our refineries.
The amount of water used in the fracking process is getting harder to deal with.
A better solution might be to build a couple of brand new refineries that could process light shale oil, close to the current producing regions.
Perhaps Trump could make this happen. However, by the time the refineries are built in 5-10 years time, Trump will be gone.
There is also a concern about how much light shale oil will still be left to process.
So, “drill, baby, drill” is impractical, especially in the time frame Trump needs to bring costs down.
What Will US Refiners Do?
US refiners will use the cheapest oil they can get. If that is from Canada, then production costs on those imports will rise by 10 percent and the price of gasoline will rise too.
US importers, not Canada and Mexico will take the hit.
But that is not as bad as it might seem at first glance because ~60% of the crude oil that runs through U.S. refineries is extracted in the US.
A 10 percent increase on 40 percent is effectively 4 percent, but that is not spread uniformly. The more a refiner depends on Canadian oil, the bigger the hit to that refiner.
Saudi makes five grades of oil but transportation costs would rise.
What About Venezuela?
We could also get heavy crude from Venezuela.
Was that also discussed when team Trump went to Venezuela demanding the release of hostages?
“Just been informed that we are bringing six hostages home from Venezuela,” Trump said on social media. “Thank you to Ric Grenell and my entire staff. Great job!”
According to the New York Times, Mauricio Claver-Carone, the U.S. special envoy for Latin America, said in a call with journalists on Friday morning that Mr. Grenell would not make any concessions in exchange for releasing American detainees.
“This is not a quid pro quo,” he said. “It’s not a negotiation in exchange for anything.” He urged the Maduro government to “heed” to Mr. Grenell’s demands “because ultimately there will be consequences otherwise.”
OilPrice reports Trade Dispute Could Force U.S. to Buy Venezuelan Oil, Canada Says
President Trump’s threat of tariffs on Canadian imports could leave the United States reliant on crude oil from Venezuela, with which the U.S. doesn’t want to work, Canadian Foreign Minister Melanie Joly told the Financial Times.
Joly is visiting this week Washington, D.C. for her first official meeting with U.S. Secretary of State Marco Rubio and other U.S. government leaders. The Canadian foreign minister emphasized the negative impacts that U.S. tariffs on Canadian goods would have on both countries’ economies, workers, and businesses on both sides of the border.
“Canadian energy and resources—including oil and critical minerals—underpin the long-term economic security and prosperity of both Canada and the United States to protect our energy security and reduce our reliance on the resources of non-like-minded countries,” Joly said ahead of her trip to Washington.
Do we really want money going to Venezuela rather than Canada? And do we even have the infrastructure where that would make any sense?
I no longer rule out economic madness.
Synopsis
This action by Trump makes little sense at first glance, and negative sense the more one understands about US refiner needs.
Trump is refusing to honor his own USMCA trade deal.
Welcome to higher prices at the pump.
Related Posts
February 1, 2025: Welcome to the Dumbest Trade War in US History, What’s Next?
February 1, 2025: Trade War Details Emerge: 25 Percent Tariffs but Only 10 Percent on Oil
We need to reflect a bit on “only 10 percent on oil”.
February 2: What’s the Impact on CPI Inflation and GDP of Trump’s Global Trade War?
Canada and Mexico plan precision responses to Trump’s tariffs. What about prices and GDP?
There are very serious potential repercussion depending on how Mexico, Canada, and China respond. Click above link for analysis and many charts.
Finally, what price does the US pay if no country expects Trump to honor his own trade deals? That’s a serious unknown.
For the record PapaDave provided these sentences
Shale oil is getting lighter and lighter as time passes, making it even harder to use in our refineries.
The amount of water used in the fracking process is getting harder to deal with.
A better solution might be to build a couple of brand new refineries that could process light shale oil, close to the current producing regions.
There is also a concern about how much light shale oil will still be left to process.
Thanks for the credit Mish!
Why don’t you tell us about the Nation Energy Program of 1980 that was set up by Canada’s present PM’s father (Pierre, not Fidel). It’s goal was to squeeze out American oil companies by taxes and regulations and incentivize them to sell out to Canadian companies and it worked. Canadian petrol companies went from 13% share to 48% share a few years later. The policy was eventually reversed but to this day American resource companies are very wary of investing in Canada. I remember at the time it really pissed off the US. US oil companies lost billions. The US never retaliated and Canadian companies operating in the US are treated exactly the same as American companies as opposed to how Canada treated American companies.
So the French Canadian Fidel nationalized our American co in Canada, ex IMO, which is 70% owned by XOM. The French Canadians hate their neighbors in the west and in the US.
I hardly think 40+ year ago issues are important to today. Different players, different rules, and different scenario all together with the passage of time.
I suppose if we wish to waste time, complaining about what past issues with other peoples agendas, we could, but that seems counter productive, don’t you think?
But the same attitude. That hasn’t changed.
Fidel stopped Sinopec, PetroChina and Cnooc from buying Nexen
and building a pipeline to BC, after the Chinese called him weak.
Trump put CNOOC on his banned list in 2020 and ordered American investors to sell their shares or have their shares frozen indefinitely. Biden kept it on the banned list when he became president. Once the Americans had dumped their shares, the stock recovered but no longer had its ADR’s trading on the NYSE. See 10 year stock price chart here:
https://tradingeconomics.com/883:hk
The protect Canadian interests still exist. Related to the Keystone permitting disaster, KMI had plans to build a pipeline parallelling their existing pipeline from Alberta to the Vancouver area only to be scuttled by Canada. That line now exists owned by Canadian interests.
You are misrepresenting the NEP. The Trudeau government spent billions buying out foreign oil companies to create Petro Canada. The original NEP, which proposed a price of 75% of world price per barrel with a floor price for Canada, was fiercely opposed by the Province of Alberta. Ironically, when the Diefenbaker Government cobbled together the Trans Canada Pipeline deal with the co-operation of the Provinces of Saskatchewan, Manitoba and Ontario, the US didn’t want the higher priced Alberta oil. The 4 provincial governments agreed to levy a 5 cent per gallon (approx 25%) in order to build a pipeline to Ontario, the manufacturing heartland. Trudeau’s NEP wanted to extend that to all of Canada. Not only did Alberta object, the Atlantic provinces did as well, due to the Irving family having that market locked using imported oil. Talk to anyone from Saudi or a gulf state, the cost of oil products internally are peanuts compared to what consumers pay in North America, becauseit is massively subsidized.
As for “wary of investing in Canada”, the Province of Alberta is a wholly owned subsidiary of Big Oil, and every Canadian outside Alberta knows it.
You can say it was good for Canada but the result was that American companies were discriminated against after having basically built the industry in Canada. It is not forgotten by the companies who lost valuable assets and they remember it and they wonder when will Canada will do that again and I must say that with the present government in Canada something like that is a certainty sooner or later. Now the companies have come back after the policies were reversed but their investment decisions are affected to this day. If Canada was an Arab county then you would expect that but it isn’t yet they acted the same way.
We just need to build more pipelines!!! That solves all problems 🙂
Or, Trump cuts a deal with Maduro, and Maduro sends more of the heavy crude we’ve been refining all along in exchange for American oil expertise, so that heavy Venezuelan crude starts flowing again.
Nope. Venezuela only exports 700,000 barrels per day. 300,000 to the US already. We need 6.5 mbpd. And this number will grow over time as US production wanes.
Venezuela has more (heavy) oil than Saudi. VZ just have no experience left to keep it flowing as all the talent ran. And the US refineries were already geared to heavy crude before Maduro appeared. And Trump will sacrifice anyone and anything to keep oil so close flowing. Snakes will cut deals with other snakes.
Yes. Venezuela has the largest oil reserves in the world. But they are incompetent at producing them. Biden recently allowed Chevron and other US firms to go back to Venezuela, in spite of sanctions.
This means that Venezuela could become a big producer in about 5 years with US help and could easily provide a good chunk of the heavy oil we need.
However, Trump hates Venezuela. He would rather shut them down, than build them up. It wouldn’t surprise me that once we have a deal with Canada, that Trump will cut Venezuela off at the knees.
Trump hated Venezuela last time because Bolton and Abrams told him to. They’re gone and Trump’s wised up about the likes of those two. How can you not like a guy who eats empanadas on camera when giving a speech? I’d take Maduro any day over Trudeau. Way better for the US to get on good terms with Venezuela than to let China get tight with them.
They aren’t incompetent at producing them. The industry has been sabotaged and sanctioned up the ying yang trying to create regime change. Sanctions are a declaration of war before the shooting starts.
“There is also a concern about how much light shale oil will still be left to process.” The answer without a technology breakthrough is less. Shale is a rock with very high porosity, the void space within the rick matrix, that is very poorly connected or has very low permeability. The low permeability is countered by drilling horizontally in the oil-bearing formation and then fracture treating the rock to expose very large surface area to the wellbore. This initially allows the wells to perform similar to conventionally (vertically) drilled wells in conventional reservoirs (for example, sandstone or limestone with orders of magnitude higher permeability), but over time the oil has to flow through greater distances of matrix rock or through very low permeability (high resistance to flow) rock, resulting in the production rate dropping rapidly. The bad news is the shale wells do not last long, around five years in the Bakkan Shale of ND; the good news is there is a lot of oil left behind, thus the opportunity for improved technology to recover additional oil.
Since the global oil disruptions of the 1970’s there have been two major events that positively impacted the generally down trending US production rate. The first was the construction of the Trans Alaskan Pipeline that provided a means to transport the massive north slope reserves to market and the second, the technology to produce oil from shale. Production from the north slope has diminished significantly, enough that I have heard chatter about what volume is necessary to keep the oil warm enough between pump stations so it will flow. There is another massive discovery west of Prudhoe Bay that could ameliorate the low flow rate issue and make a serious contribution to US production. Hopefully it can be developed.
Also … shale production now declining…
Natural Resources Market Commentary – Q3 2024Goehring & Rozencwajg Natural Resource Investors
In the volatile world of U.S. natural gas, the past quarter unfolded with all the drama of a Shakespearean act. Prices began at a modest $2.60 per Mcf, buoyed by the quiet equilibrium of early spring.
But by mid-June, the plot had transformed. An unseasonal heat wave gripping the central United States sent prices soaring to $3.15, a rally that spoke as much to the market’s sensitivity as it did to the hot weather. Yet, as quickly as the heat arrived, it receded. Milder temperatures reclaimed the stage and gas prices tumbled in response, bottoming at $1.90 by the end of August.
While market participants obsessed over weather patterns, few paused to consider the silent protagonist in this unfolding drama: inventories. The 2023–2024 winter, among the warmest on record, left a legacy of near-record storage levels. At the outset of the injection season, inventories stood at a staggering 700 Bcf—or 40%— above the ten-year average.
Yet, tight fundamentals have nearly erased this surplus in a remarkable turn. Over the third quarter alone, inventories were drawn down by almost 400 Bcf. By quarter’s end, storage levels stood less than 5% above the norm, a quiet but profound shift that few have fully grasped.
This brings us to the present moment, where the market stands at a crossroads. If the coming winter delivers typical cold—after two years of unseasonable warmth—U.S. natural gas prices could well align with international benchmarks which currently hover near $14/MMBtu. The implications are vast, mainly as U.S. natural gas production, once seemingly boundless, now hints of rolling over.
Over the past fifteen months, growth in U.S. gas production has stalled. Indeed, in the past seven months, production has begun to contract.
Since peaking in December 2023, U.S. dry gas supply has fallen by 3 Bcf per day—a 3% decline. Year-over-year data tells a similar story, with dry gas production now down by 1.2 Bcf per day, slightly more than 1%. Read More
The Depletion Paradox
In recent months, we’ve engaged with a range of investors and oil industry executives. While many grasp the logic behind our analysis, few are ready to accept its implications. At a recent talk before an audience of oil and gas operators at the Houston Petroleum Club, the most common counterargument boiled down to this: if shale production continues to decline, higher prices will follow.
And with higher prices, operators know precisely where to drill next. Each operator, brimming with confidence in their ability to boost production, assumes that the industry as a whole will do the same.
The rationale seemed straightforward: with the rig count far below previous peaks, availability is unlikely to be a bottleneck. While the remaining drilling locations might be less productive, they could still yield acceptable returns at elevated oil and gas prices. Given the vast number of undrilled but economically marginal locations, operators were convinced that U.S. shale production would rebound swiftly, negating any nascent rally in prices.
Yet, as we will argue, this collective confidence may rest on shaky ground. The factors driving shale’s decline are far more structural than the industry at large appears willing to admit.
Our models point to a sobering conclusion: even with substantially higher prices and an abundance of undrilled locations, production is set to continue its decline. We call this phenomenon the “depletion paradox.” It is a familiar story, and history provides a clear precedent.
Consider the case of conventional U.S. crude production in the 1970s. Production peaked in November 1970 at 10 million barrels per day, with oil priced at just $3.18 per barrel. At that time, the industry operated a modest 302 rigs drilling for oil. The first OPEC oil crisis in 1973 sparked a response from President Nixon in the form of Project Independence—a sweeping initiative aimed at reversing the decline in U.S. output through deregulation and expedited permitting.
Much like today, optimism abounded among oil producers, who believed that higher prices would unleash a drilling boom and restore U.S. production growth. They were confident they knew where to drill; all they needed was the right price signal.
Prices soared from $3.18 per barrel in 1973 to $34 per barrel by 1981. Producers, true to their promises, responded with vigor. The rig count climbed from 993 in 1973 to a staggering 4,500 by late 1981. Yet despite this unprecedented surge in drilling activity, U.S. oil production steadily declined throughout the 1970s. By the end of 1981, production had fallen to 8.5 million barrels per day—far below the peak achieved a decade earlier and lower than when Nixon announced his ambitious goals.
Three decades later, in 2010, U.S. oil production hit a nadir of 5 million barrels per day, even as prices hovered around $100 per barrel—30 times higher than in 1973. The depletion paradox had firmly taken hold.
The industry’s assumption—that higher prices alone could counteract geological realities—proved tragically flawed. Today, as we observe the shale sector grappling with similar dynamics, it seems history may once again be repeating itself.
We believe the U.S. shale sector now stands at a crossroads eerily similar to that faced by conventional oil production in 1973.
Read More https://blog.gorozen.com/blog/the-depletion-paradox
After ARAMCO was confiscated and Ian/Iraq was was over new oilfields
in Alaska, the north sea, the Gulf of Mexico and Russia sent oil prices
down for two decades, ex a short spike during the USSR collapse. After 1995 oil prices climbed reaching $147 in early 2008. During the financial crisis oil prices plunged to $30, recover and plunged again to (-)$40 five years ago. Aubrey Mclendon convinced wall street to invest in land (RE): one acre produce 8 times more oil (8 times more tenants) in horizontal drilling than in vertical drilling. When finance dried up ==> oil prices plunged.
Financing land is x4 times more expensive than 5 years ago.
Excellent Post, and thanks PapaDave for the input! It appears from this post, to me anyway, that something we don’t yet know about, could be Plan B.
Perhaps a deal with Venezuela, but that doesn’t appear to make sense, or be cost effective after transportation and how much can we truly put our Countries Energy Needs, into the hands of Venezuela? Maybe some heavy here and there, but not in any dependent way I don’t imagine.
We best work out out with Canada, would be my guess, and if Trump has to eat some crow, so be it! Trump may not have gotten us into this mess, but that doesn’t matter much now does it. It’s “His Job” to fix, so fix it He will. At what cost and/or harm to America we shall see, but I doubt very much, as Trump doesn’t like to lose.
I also have seen a trait in Trump over the years, where He does seem to pull a rabbit out of his hat (ass maybe too sometimes), and make you go Hmm… I didn’t see that coming…
We shall see soon enough, but I feel pretty confident from last episodes I have watched of: “When The Trump Turns”
-US oil production is at a plateau and the drop off the cliff is coming. The only question is what year. The Europeans are the most likely to get hit from the reduction in American energy exports. Europeans now beginning to search for alternatives including Russian exports again.
US natural gas also to take a hit and Europeans again to get hit hardest by declining natural gas exports.
IT IS A BIG GAME BUT WE WILL BE BETTER OFF IN A FEW MONTHS! THE GAMES HAVE BEGUN! I THINK TRUMP IS A BETTER GAME PLAYER! IF HE CAN BUILD SKYSCRAPERS HE CAN BEAT THESE PEOPLE! EUROPE IS NOW OVER 12% MUSLIM WITH ALL THE ILLEGALS COUNTED AND THOUSANDS MORE COMING IN EACH WEEK! THEY ARE LOSING AND GOING DOWN THE TUBES! CANADA AND MEXICO WILL HAVE TO TAKE IT!
We do… at $420 a barrel. The serfs will pay it.
Talk about missing the point! There is more than one fuel and much research is going on in the Nat Gas & coal Gassification areas, not to mention Hydrogen.. Here’s the real data, with sources. Oh BTW, shale was first discovered during the Civil War and the technology has improved from then.
Crude Oil
Natural Gas
Oil Shale
Talk about missing the point
How much of that is available now? When? In Usable form?
And what does NG have to do with the discussion at all?
At what cost to produce?
Cost is the crucial factor…
Energy is never “free”, because we can’t access wind or solar power without turbines, solar panels, batteries and grids, any more than we can put fossil fuels to use without mines, wells, refineries and pipelines.
Every component in this energy-supply infrastructure is material, and nothing material can be created without using energy.
Accordingly, we have to “use” energy to “get” energy.
What this means is that, whenever energy is accessed for our a use, a proportion of this energy is always consumed in the access process, and is not available for any other economic purpose. This “consumed in access” component is known in Surplus Energy Economics as the Energy Cost of Energy.
Although there are other processes in play, ECoE is the final arbiter of trends in economic prosperity. If ECoEs are low, we prosper. If ECoEs rise, prior growth in prosperity goes into reverse.
https://surplusenergyeconomics.wordpress.com/2025/02/03/298-energy-not-money-the-sequence-unfolds/
Ok folks …..To demonstrate this … I will use an extreme example… what if you discovered that one foot beneath the surface of the moon — there was an ocean of quality oil with 1000000 x more volume than the Pacific Ocean. And you were able to buy the rights to that oil for $1
Should you celebrate? If not why not?
Hint – it’s not even worth the dollar 🙂
Conventional oil production peaked nearly 20 years ago, we have been desperately cannibalizing nuclear war heads to fuel reactors, and shale oil production is now declining. Renewable energy is nothing more than a mirage of hopium.
The fourth horseman of the apocalypse is now mounted – natural gas production is contracting.
https://fasteddynz.substack.com/p/natural-gas-production-is-contracting
In California energy news, there was a refinery fire this weekend in northern California, following a fire at a battery storage facility, as well.
US shale oil may have already peaked.
Very interesting video from Chris Martenson, PhD interviewing oil analyst Adam Rozencwajg:
https://www.youtube.com/watch?v=UV4NNV1pDZs
Basically affordable energy is past peak… shale was the last gasp …
I am now asking https://fasteddynz.substack.com/p/is-russia-running-out-of-gas
On DW, Germany’s public broadcaster, which is accessible in English either on Firestick or the Roku streaming device, some of Germany’s politicians expressed an interest recently in repairing the Nordstream gas pipeline. They also want to restore commercial ties with Russia in order to access its less costly natural gas. Importing LNG from the US has been very costly to the German economy and I suspect that there are a lot Germans who are tired of being dominated by the US. Most Germans are too young to remember President Kennedy’s 1963 trip to Berlin and his famous Cold War speech.
Germany will be holding national elections later in February.
The Europeans are going to get hit extremely hard once US oil and gas exports decline. I would expect reality to hit home hard. You can expect more and more calls for Russian energy when American oil and gas declines in the near future.
Is Germany changing course? Nord Stream back in the spotlight | News.az
“Michael Kretschmer is not the only one openly speaking out on this issue. Alice Weidel, a politician from the Alternative for Germany (AfD) party, previously stated that Germany must urgently launch Nord Stream 2. Moreover, British politician David Kurten has also joined the discussion on potentially resuming deliveries via the Russian pipeline, noting that one of the Nord Stream 2 lines remains undamaged and could be put into operation.”
The thing is .. if one key pillar of the global economy breaks.. (Europe and the UK are most certainly both key pillars)… this is what happens to global supply chains and the other pillars including finance
https://fasteddynz.substack.com/p/financial-system-supply-chain-cross
To understand the nature of the problem, one must understand need vs desire.
All the oil you have is all the oil you need if you use it properly.
There are plenty of oil alternatives and ways to lessen need. King Coal, was King for a reason.
The world is a closed system, but every atom is full of energy waiting to be released, some more than others with our current tech.
The real issue is aligning our desires with our needs. as always…
Yes and if we bang a tambourine and sing KOOMbaya… it will all work out…
Sorry but we need cheap energy … otherwise inflation blasts off totally out of control… and civilization collapses
Energy is never “free”, because we can’t access wind or solar power without turbines, solar panels, batteries and grids, any more than we can put fossil fuels to use without mines, wells, refineries and pipelines.
Every component in this energy-supply infrastructure is material, and nothing material can be created without using energy.
Accordingly, we have to “use” energy to “get” energy.
What this means is that, whenever energy is accessed for our a use, a proportion of this energy is always consumed in the access process, and is not available for any other economic purpose. This “consumed in access” component is known in Surplus Energy Economics as the Energy Cost of Energy.
Although there are other processes in play, ECoE is the final arbiter of trends in economic prosperity. If ECoEs are low, we prosper. If ECoEs rise, prior growth in prosperity goes into reverse.
https://surplusenergyeconomics.wordpress.com/2025/02/03/298-energy-not-money-the-sequence-unfolds/
But the MAGA crowd will say that Trump is playing 17-dimensional chess or whatever.
This is the same thing that 0-bama fans were saying in 2009!
“same thing that 0-bama fans were saying in 2009!”
That’s When We Got ‘Obamacare’ – Forced Pay Health Care With Double/Triple Premiums To Save Insurance Companies During Bankster’s Sliced & Diced Mortgage Scam Collapse 2008/09.!
29 Trillion Bailout – Ron Paul Partial Audit.!
When do we get those MRNA Cancer Vaccines????? hahaha
People are so gullible … over and over and over again
Last week’s Macro Voices podcast, hosted by E. Townsend, had a guest on that confirms everything that Mish has shared here. It is worth a listen.
Thanks, Mish.
They stopped using water over a decade ago. They now use compressed air.
It’s so annoying listening to the Americans that these days say “We don’t need Canada or anything they export to us”, they act like the 4.5 Million Barrels a day Canada supplies to the US can just be magically replaced at the flip of a switch.
2 years ago Germany came to Canada begging to sign a multi billion dollar energy deal with us, Europe wants a reliable trustworthy supply of oil and Natural gas because right now they are at the mercy of Russia, a not so friendly trading partner. Canada declined.
With Canada the US has a nation that has a supply of Heavy Oil that will conceivably never run out. It’s cheap, ridiculously abundant, right across the border and all of the infrastructure to easily get it to the refineries is already in place its ridiculous to even think of going anywhere else for it but Trump with his stupid rhetoric now has Canadians asking if we need to find a new energy Trading partner for our securityl
When Canada is 52nd state, you will have all of the Iphones you can swipe in a day, and your comrades in the 51 other states will have all the oil Canad and Greenland can pump.
We will have lakes of Maple Syrup, resevoirs awaiting fluffy pancakes to welcome the new morning in the American Union,
Put down your typewriter comrade, join the new world being built before your eyes, burn your statues of Trudeau and the King, welcome democracy with the purchase of a nice fire arm and a beautiful 52 star flag to fly over your home and business.
“However, by the time the refineries are built in 5-10 years time, Trump will be gone.”
Hopefully much, much sooner, like tomorrow.
A 160,000 pro Muslim mob filled Brandenburg Gate protesting Friedrich Merz CDU, who supported the far right anti immigrants proposal, which failed on Fri. The far right is taboo in Germany. But socialist Denmark and Hungary restricted immigration.
South America largest oil producers: Brazil: 3.5Mb/d, Venezuela: 1.1Mb/d, Columbia:850Kb/d and Argentina: 800Kb/d. The potential is high. Most Canadian oil is exported to the mid west. What will Canada do to stay in the game: cut oil prices to avoid the conflict and bring strong US dollars back home. If they don’t MBS will fill
the gap, trading weapons for oil.
Venezuela’s remaining oil is low quality …
Heavy sour crude oil blends like Merey, which has an API gravity of 16 degrees and 2.45% sulfur content, are costly, complex and carbon-intensive to refine into high-grade low emission fuels. Only refineries specifically configured to process those types of petroleum can accept its as feedstock, thereby limiting the market.
https://oilprice.com/Energy/Crude-Oil/Venezuelas-Vast-Oil-Wealth-Could-Become-The-Worlds-Largest-Stranded-Asset.html
There is only so much heavy oil needed… because it must be blended with other grades of oil… and Canada is able to produce sufficient amounts of this oil and pipe it directly to the US thereby keeping costs manageable…
Venezuela is a basket case and the oil industry has gone to pieces…. primarily because their tar sand oil is not needed…. infrastructure has crumbled and would take hundreds of billions of dollars to revive it.
But again – why revive it when the infrastructure is in place in Canada … the distance is much closer… costs are less and the tar sands are not in decline.
“Venezuela is a basket case and the oil industry has gone to pieces”
Because The US/NATO Keeps Attacking & Regime Changing The
Oil & Pipeline Countries.
In 2001, This is a memo that describes how we’re going to take out seven countries in five years, starting with Iraq, then Syria, Lebanon, Libya, Somalia, Sudan and – Finishing off, Iran.” Gen W. Clark
Iran Only Country Left.
America/NATO Are Bankrupt – Taking Control Of Oil & Pipelines.
36 Trillion National Debt + Adding 4-5 Trillion a Year. Trillions In Bailouts – No Audits.!
Suddenly Sleepy Joe doesn’t seem so bad. Who knew that giving a felon and a crackhead (Musk) the levers of power would unravel things so quickly.
Trump probably would have been smart to take my advice and declare a national emergency, based on national security, back in 2016, told him to start re tooling the refineries for our type of oil because that was the year we found out united states had the most untapped oil on earth. His boast about us not needing any one elses oil today would have been the first truth I’ve heard out of his beautiful piehole ever. Sorry bout the long rough sentence, been smokin the canny-bus with Rogan tonight 😬
Though oil prices are the single greatest driver of economic activity, I am not too concerned yet.
These tariffs look to be a classic Trump negotiating tool and may well be here today gone tomorrow. That kind of chutzpah and ruthlessness is why we elected him.
I don’t know what’ll happen but this is all very exciting (not in a good way).
May you live in interesting times.
How can this not pile more inflation onto the consumer and businesses…
I am sure there is some logic to these tariffs but for the life of me I cannot figure it out.
The US clearly NEEDS tar sands oil … so Trump is lying … so putting a tariff on a product that you cannot produce domestically is seemingly illogical… it would appear that the government is hell bent on driving already brutal inflation even higher.
WTF?
Apparently there is a meeting tomorrow with Trump, Mexico and Canada. If he ends up getting some better arrangements a lot of folks will have egg on their face.
Foreshadow last week, the big reveal on Saturday, but not starting until Feb 4? Sure seems formulaic and designed to generate a lot of hype before anything goes into effect.
Same script, different actors.
Interesting. Worldwide stock markets are sliding on Trumps trade war fears. US futures are down. Gold is down. Crypto is way down.
What’s up? Oil. On fears of possible supply disruptions.
What a great show! Looking forward to the trading opportunities.
Exactly. Between “scary” tariffs and Deep Seek perturbations, maybe I can finally redeploy cash. https://m.youtube.com/watch?v=ROFQSAVPA8A
“Do we really want money going to Venezuela rather than Canada?
I no longer rule out economic madness.”
If you want to call Trump a thin skinned, big mouthed, narcissistic liar, I would not argue with you. Thing is when you call him crazy, he has you right where he wants you.
Trump wants Venezuelan oil production higher? OMG. I cannot believe how the Trump-I-am-so-crazy technique works again and again.
The money will to the lowest cost producer… Venezuelan oil is low quality and heavy … like the tar sands…
The tar sands are close to the US border and can be piped in so it will always cost less… and there is plenty of it… and the US only needs to much to blend with shale oil …
https://oilprice.com/Energy/Crude-Oil/Venezuelas-Vast-Oil-Wealth-Could-Become-The-Worlds-Largest-Stranded-Asset.html
When Venezuela is our 53rd US State, the oil will then be within our borders and very easy to process and transport within the New Bigger and Better USA.
The Coming ‘North American Union’.
(NAU) is a theoretical economic and political continental union of Canada, Mexico and the United States, the three largest and most populous countries in North America. The Concept is loosely based on the European Union.
Warren Buffet has big investments in using Rail Tankers to haul Canadian Tarsands Oil to the Gulf Coast for over a decade already. The story shows demand by America.
https://www.earthisland.org/journal/index.php/articles/entry/firm_invests_oil-by-rail_plan_along_keystone_xl_pipeline_route
We still get about 90,000 bpd by train from Canada. Pipelines carry the other 4,410,000 bpd.
I read that there is a loophole forr oil coming from Canada via pipelines and will not be effected by tariffs. The oil that is transported over land such as trucks and trains will be hit by tariffs. Thus we may not see much effect on oil and gas prices. Not sure if the article was correct or not.
I was wrong. This the loophole i read in a post.
——–
So will Canada push more exports to Cushing to avoid tariffs?
Not sure if many are aware, but there is a loophole in US tariff policy on Canadian O&G exported to the US.
Tariffs do not apply to Canadian O&G if it is just transported through the US for export. (This is an old clause but it seems the latest EO reiterates it)
Meaning: Tariffs only apply to actual consumption within US borders.
Yes. There is no tariff on Canadian products that transit through the US. The same goes for Mexican products that pass through the US to Canada. However, to the best of my knowledge, we need every molecule of Canadian heavy oil for our refineries. I don’t think that any of it gets exported.
Some Canadian Natural Gas does transit through the US, gets converted to LNG at our southern terminals, and exported. All for a fee.
I don’t see here an answer to the question. How much does the US produce and how much does it consume. I have read we produced about 14 million barrels and consume about 20 so we’re 6 million barrels shy per day. This is irregardless of who refines what. Is this correct because I keep hearing conflicting answers
I have answered this several times recently. But I will do so again. It’s a bit complicated, but I try to simplify it as best I can.
The US produces 3.5 mbpd of conventional heavy crude oil. This has been a steady decline from the 10 mbpd we produced in 1970. Simply put, we are slowly running out of heavy crude.
Fortunately, around 2009, we figured out how to frack shale oil. We have grown production of this light shale oil from 0 to 10 mbpd in the last 15 years.
Add 3.5 mbpd of heavy conventional oil to 10 mbpd of light shale oil and the US produces a total of 13.5 mbpd (though it fluctuates between 13 and 14 depending on the day).
However, our refineries that process this otherwise useless crude oil into useable petroleum products like gasoline, diesel, jet fuel, etc. were all built before 1980 and were all designed to use heavy conventional oil. So we cannot use all our light shale oil in our refineries. We manage to use 6 out of 10 mbpd of light shale oil in our refineries by blending it with heavy oil and tweaking our refinery processes somewhat. We export the other 4 mbpd that we cannot use.
So our refineries can use 3.5 heavy + 6 light for a total of 9.5 mbpd of US oil.
But our refineries have a capacity to refine a maximum of 18 mbpd of oil, and typically have a run rate of 16 mbpd. But they only can use 9.5 mbpd of US oil.
So for decades, they have been importing heavy oil from elsewhere and today they must import the remaining 6.5 mbpd of heavy oil they need from Canada (4.5), Mexico (0.5), Columbia, Venezuela, Brazil (0.3 each), and others.
Again, refiners need this 6.5 imported heavy plus 3.5 of our own heavy to mix with our 6 light. Without this imported heavy, we could probably only use 2 mbpd of our light shale oil and we would have to export 8 mbpd because we can’t use it. (this is my own estimate, and could be off a bit).
So where does the 20 mbpd figure come from?
3.5 US heavy + 10 US light + 6.5 imported heavy = 20 mbpd of oil in total
But since we must export 4 mbpd of US light, we only use 16 mbpd in our refineries.
Our refineries produce 16 mbpd of useful petroleum products. However, we export 6 mbpd of these, while importing 2 mbpd. So, in fact, the US actually consumes just 12 mbpd of petroleum products.
Hope that helps.
Ok thanks, this needs to go into the google database with flow charts because their answer is incorrect.
you ain’t getting any more oil, and we are pulling all electrical power to northern states, you bastards gong to freez in the dark
Now, now. That is very un-Canadian of you. Don’t get mad at hmk. He isn’t the one trying to f*ck Canada. That would be President Trump. And for all we know, this is just another one of his amusing practical jokes. You know, like sticking a UV light up your ass to stop Covid. Or trying to convince folks to drink horse piss. Funny eh?
“Like sticking a UV light up your ass to stop Covid” – Probably Better Than Taking The COVID BioWeapon.
Have you seen how eastern Canada gets its oil? It’s by a pipeline that crosses into the US for hundreds of miles before going into eastern Canada. We got each other by the balls on this one so neither the US nor Canada will cut one another off. It will play out by tariffs and eventually a deal will be worked out but it will probably not happen with the present Canadian government because their policies are the root of the problem.
140 years old, right on Lake Michigan- what’s not to like?
How much free product is underneath? Has IN Dist 1 Congressman and
x-pharma salesman Frank Mrvan weighed in? He wears a hard hat for pictures in front of this place in every campaign mailer, extolling its virtues.
https://m.youtube.com/watch?v=UryYVYihKDg
It is clear that the financial institutions were and are Trump’s largest donors.
These tariffs are going to take allot of creating Fiat into existance. Imagine the subsidies that will be created as a result of the tariffs for the refining industry.
Mom and Pop are screwed. Inflation will reign Supreme.
Just read a thread on /r/options of a guy saying he’s going to kill himself. Lost $250k. Sad. Wonder how many countless deaths will be at Trump’s feet in February.
Really ?
Went broke on a 2 percent fall from highs. Played the wrong game.
Dramatic no?
Is there anywhere we can get a live feed of him on the ledge getting ready to jump?
i wanna see the footage of Trump holding a gun to the guys head and telling him to put 250K$ into that investment.
We often blame others for our misperception of the world, and the actions we take based on that misperception. It always easier to think someone else is wrong, rather than find our own reasoning faulty.
Strange world where people can no longer understand how they think, they have to ask AI how to make a sandwich. or an investment..
Everything that Trump is doing makes no economic sense. CBS 60 minutes had Trump Tariff advisor explaining how it’s going to work. He also seems clueless. Most of the trade issues were caused a long time ago on his advice to the Republicans over the last 30 years.
Again they seem to want to take credit for things already happening. Chinese are buying very few foreign Auto brands. Most America OEMs have pulled out of sales in China. During the rush to sell in China most parts suppliers were forced to move operations to China and supply parts from China to all global manufacturing.
There is no incentive to keep Auto parts manufacturing in China. Most of this should be moving out of China. The existing tarriffs would have been enough for this to start. Higher tarriffs are only going to lead to higher prices since it is very costly to move existing production lines due to the cost of validation testing when changing production locations.
I didn’t see the article.
But the goal is to push up the US dollar by an amount to offset the tariffs. That way there is no cost to the US consumer and instead the countries exporting into the USA pay for it via their falling currency.
Obviously 25% is an impossible number so long term Canada/Mexico will get resolved. But 10% (the amount levied on China) is a possibility.
It makes no sense… and Trump (Potus) does not make these policies… the people who actually run the show make them … he is just the guy who gets in front of the cameras …
The people behind the curtain are not stupid… so why are they doing this?
“Everything that Trump is doing makes no economic sense”
TPTB Have Not Been Following ANY Financial Rules Or Laws
Since The 911 False Flag Attack – Everything Hidden Under
‘National Security’.!
36 Trillion National Debt + Adding 4-5 Trillion a Year. Trillions
In Bailouts – No Audits.!
Doomberg would say the Western Hemisphere has all the energy we need, though without drilling into grades and local needs. But as far as molecules of hydrocarbons, we have no need to venture anywhere but the Americas
Doomberg is fantastic.
If you are looking for someone to lie to you and tell you all is ok then yes he is awesome…
But…
Conventional oil production peaked nearly 20 years ago, we have been desperately cannibalizing nuclear war heads to fuel reactors, and shale oil production is now declining. Renewable energy is nothing more than a mirage of hopium.
The fourth horseman of the apocalypse is now mounted – natural gas production is contracting.
https://fasteddynz.substack.com/p/natural-gas-production-is-contracting
Doomberg is one of a dozen folks that I follow for energy information. I find that they all provide great info, but they all do not agree on everything.
Notice his focus on Western Hemisphere and Americas. People then mistakenly interpret that as the United States has all it needs. That is incorrect. We absolutely need Canada in the equation. And then you can add in Mexico, Venezuela, Columbia, Brazil etc.
Over the past fifteen months, growth in U.S. gas production has stalled. Indeed, in the past seven months, production has begun to contract. Since peaking in December 2023, U.S. dry gas supply has fallen by 3 Bcf per day—a 3% decline. Year-over-year data tells a similar story, with dry gas production now down by 1.2 Bcf per day, slightly more than 1%.
https://blog.gorozen.com/blog/natural-resources-q3-2024
My guess is that has something to do with the fact that through the summer, gas prices were headed down to under $2, as recently as August it was under $2. Low prices make for less production
The US is quite literally awash with gas.
For now all is ok … however all is not ok in Europe … the UK… New Zealand …
The UK is particularly concerning … https://consciousnessofsheep.co.uk/2025/01/10/when-was-growth/
There is lots of speculation but let’s review the solid facts as of the time of this comment:
That is all. Enjoy your morning/afternoon/evening/night wherever you are right now.
“The world is watching and is angry all at Trump.”
The CIA/MOSSAD Have Already Made Two Assassination
Attempts on Trump – He’s Changing Things Up – Just Like JFK.!
The CIA/MOSSAD MIC Complex War Machine Can’t Have That.!
Post-Bush/Cheney Patriot Act + Post-Obama/Biden
NDAA = UniParty Warmongers.
One thing you didn’t mention is that 72% of all imported Canadian oil comes from the USA. The reason is the opposite of the US in that Canadian refineries need light sweet crude. So while lots of oil heads south, plenty heads back up North to Canada from the USA (basically the Eastern provinces import from the US rather than use Canadian oil).
The premier of Alberta does not want to put a special tax on oil coming to the US because that will hurt their economy badly. The Feds under Trudeau may feel differently. The problem in Canada is that without strong leadership at the federal level it ends up being a bunch of provinces all trying to cut the best deal possible with the US to mitigate the pain.
It’s going to be interesting to see who blinks first and whether individual provinces attempt to cut their own deals given the Federal government is paralyzed with Trudeau having dissolved parliament.
I expect Canada to act tough initially but fold eventually once their dollar starts to fall and everything they import rises because of the falling dollar.
Canadian Provincial leaders do not have the power to negotiate trade deals with the US. That is the purview of their Federal Government.
There is no need for Canada to put an export tax on oil since Trump already put a 10% tariff on Canadian oil. Unless the Federal Government was willing to transfer that export tax to the provinces affected (likely Alberta).
At this point, Canada has identified $155 billion of US products that they will tariff. That is the extent of their response so far.
The Canadian government may have identified $155b but reading the threads on subreddit /r/Canada, they are already talking about boycotting US products. Lots of interesting posts there, I am reading it all to profit from it.
Boycotting US products is something that provinces can decide to do in addition to the Canadian Federal Govt tariffs. I guess it is classic politics: never let a crisis go to waste. Doug Ford, the Provincial Premier of Ontario even called a snap election to take advantage of the situation. He will probably win in a landslide as a result, as he rallies the people of Ontario to fight Trump’s trade war.
Unlike here in America, it seems like most Canadians are sticking together on this subject. They are pissed.
This could permanently damage relations with our closet (literally) ally. What happens if Canada cozies up to China after this? What will the US do then?
Yeah they’re pissed. https://www.reddit.com/r/BuyCanadian
Another thread, Canadians canceling their trips to US.
But getting cozy with China would be the excuse trump would need to invade and take Greenland while he’s at it.
That may be what all of this is about.
If we believe what Mish writes about tariffs (that they only hurt the consumers in that country) then Canada putting tariffs on 155 billion in US products is totally counter productive because it’s not going to hurt the US at all and will only hurt (and anger) Canadian citizens who will most definitely be buying food and oil since you can’t live without it.
It’s true that Provinces don’t negotiate trade deals, but they can do what Doug Ford in Ontario did which is ban sales of US liquor/tobacco products. At the same time Ford is asking Alberta to charge even more for the oil going to the US to drive up costs for US refineries. Whether Alberta can put a ‘special price tax’ on only for sales to the US vs say China is up for debate (presumably they can). Again, not a trade deal per say but something provinces can do on their own.
I doubt if provinces can cut deals with another country.
As for rising imports – Canada will get its stuff from somewhere else. I’m sure Cuba exports oranges.
Orange man bad they scream, try Lime Man or Grapefruit man. Someone has dared to upset the inertia of the world, we must all panic as fast as possible.
Strange how the more we internet we have, the less we understand.
Correct. Canada has newer refineries that can process US light shale oil. As a result, they import 0.8 mbpd of US light oil. Which is part of the 4 mbpd of light shale oil that the US exports. However, because of their flexibility, they could substitute Canadian oil if needed. Whereas the US cannot do the same.
And guess what? Canada is not putting tariffs on US oil, because they don’t want to disadvantage their refineries. Instead, they are putting tariffs on American finished goods.
“I expect Canada to act tough initially but fold eventually once their dollar starts to fall and everything they import rises because of the falling dollar.”
This is not a fight that Canada wants. I expect them to figure out a way to give Trump some kind of public “win” that does not hurt their country too badly. What complicates this is that they don’t want to strike a separate deal with the US, and leave Mexico high and dry. Because they signed that trade agreement with the US and Mexico, and they want to honor their trade agreements, even if the US does not.
Ironically for a country that should be energy self sufficient Canada is a mess. There are no pipelines from Alberta to the Eastern Provinces. So they can’t substitute Canadian oil unless they are going to use 10000 trucks a day to move it which is highly unlikely.
This lack of a pipeline has been a sore spot for generations between the Eastern provinces and Alberta.
All true. I think it was Quebec that kept blocking the construction of more west to east pipelines in Canada.
And it is the Federal Liberal government that has been attempting to throttle oil and gas production.
However, it was also the Federal Liberals that took over and completed the TMX pipeline expansion at a cost of over $30 billion. And they approved the soon to be completed LNG project in BC as well.
A lot of contradicting political actions.
I see that Trump is finally going to talk to Trudeau on Monday. That leaves a window of opportunity to prevent this tariff war before it starts on Tuesday. I wonder if Trump is getting enough pressure from US corporate leaders to make him change his mind. And I wonder if Trudeau is clever enough to figure out how to give Trump some kind of “public win”, without hurting his country too much?
My original opinion remains the same. Trump WANTS tariffs and a trade war because he thinks he can “win” that war. So I still expect the war to start on Tuesday. Perhaps I will be wrong. Time will tell. Monday morning, I may have to buy back some of the stocks that I recently sold, if they have declined to attractive levels. Just in case Trump backs down.
I think Trump wants to set examples in the same way he set an example with Colombia over the return of criminals. To be taken seriously you need to follow through once or twice to set an example.
Once you set an example or two, especially with allies and friends, everyone will know they could be next. This is how you get everyone in line on NATO spending and anything else you want to do at the world level.
LOL – I’ve never heard bullying referred to as “setting an example”.
And you do that to your “friends”?
With all due respect to TexasTim, it’s going to be fun watching him tie himself into a Gordian knot to justify Trump’s actions over the next four years.
You wanted this Tim right? You reap what you sow buddy. I hope your Canadian fam survives this mess.
Not all Trumps actions are going to be great. He’s no more infallible than anyone else.
Change is hard. Some of the changes aren’t going to work. But some will. I’d rather attempt a bunch of changes and keep those that work and discard those that don’t than continue to do nothing.
Almost everyone’s bullied someone at some point in their lives to ‘set an example’ or ‘send a message’ to get what they want. It’s one of the old things in human nature (animal world too).
Do people do it to their friends? Of course they do. I imagine you’ve done it plenty of times even if you aren’t aware of it. That’s why there is a whole ‘micro aggression’ culture that’s sprung up in the last couple of decades that describes this.
bullying often referred to as “leverage” in a relationship. When a girlfriend says no lovedovey without a big night out first, is she a bully or using just using leverage to get what she wants?
Relationships are give and take, Canada has been taking alot from the USA for too little back for a long time, its time to change the balance of the relationship.
Negotiating takes leverage, or else “why should I” becomes the default state.
WTF kind of example is he setting? Do you beat your wife and kids to show how tough you are Tim?
I spanked my kids to let them know that when I gave a verbal warning that ‘enough was enough’ that the next time I gave that verbal warning I did not have to escalate to a spanking (Note: That’s also how I was raised by my parents and let me tell you I didn’t have to get spanked twice).
Trump is giving the equivalent of spankings. No serious long term damage will be done.
All it took was one swat on the ass and Mexico got into line. Very smart of them to avoid anything more.
“No serious long term damage will be done” HaHaHa
“That Many Nations Would Disappear From the Face
of the Earth – That Russia Would Be the Instrument
of Chastisement From Heaven For the Whole World.”
Sister Lucia of Fatima 1957
While Your CIA/MOSSAD ‘Operation Mockingbird’ Media System Tells You Russia Is ‘Bluffing’ About Using ‘Nuclear’ Weapons.!
TT, you are right. There were nearly 200,000 estimated illegal crossings from Canada to the USA in 2023. Worse, 86% of the crossings on the terrorist watch list came from Canada not Mexico. I think Trump is not happy with how Canada is managing its border, and this is why he did what he did.
And realistically, Canada does not have anyone else to sell all its oil to. The cost to move that much oil to a coast where it could be sold on the world markets is enormous.
So which is more likely? Canada building that infrastructure or securing their borders to the point it satisfies Trump?
The border has security on both sides;
The Canada Border Services Agency (CBSA) is responsible for what comes into Canada, and U.S. Customs and Border Protection (CBP) is responsible for what comes into the United States.
Sounds like it’s the US security that’s the problem.
Why is it Canada’s problem that the US can’t guard it’s borders. The US needs help from little brother
Canada, has more than enough lumber to build a proper fence along the border, no more excuses….
“Once you set an example or two, especially with allies and friends, – ‘Everyone’ – will know they could be next”
Which Is Exactly Why The BRIC Nations Will Eventually Tire Of The US/NATO Belligerence.
“That Many Nations Would Disappear From the Face of the Earth – That Russia Would Be the Instrument of Chastisement From Heaven For the Whole World.”
Sister Lucia of Fatima 1957
While Your CIA/MOSSAD ‘Operation Mockingbird’ Media System Tells You Russia Is ‘Bluffing’ About Using ‘Nuclear’ Weapons.!
Throw on top of all these political shenanigans the increasing evidence that US shale plays may have peaked and things may get real interesting really quickly. See this: https://blog.gorozen.com/blog/the-depletion-paradox
There is only one frakked field left in the US that is still increasing in production and that is west Texas/Permian. Everything else is going sideways or down. We used to hear about all the $100k a year jobs in the Bakken (North Dakota) and we dont hear that anymore. Before 2014 frakking wasnt even considered possible cause of the high cost. Another side effect of free money 2008-2022 was lowering of drilling costs (borrowing 0% money) making frakking financially possible. West Texas may be peaking this year. Then we are back to offshore, which isnt cheap or very reliable. Like a lot of things, we have delayed the day of reckoning.
Excellent post Mish!
Regarding Venezuelan oil. They currently export just 700,000 bpd. Apparently the US got 300,000 of that in December, the highest amount in many years. The rest goes elsewhere in the world.
Even if we got the entire 700k, that is only around 10% of our 6.5 mpbd of oil imports, of which 4.5 mbpd comes from Canada. So Venezuela is not a viable alternative.
its not the oil they export that counts, its the oil that is in the ground that matters. After the covid MRNA vaccines do their thing, the population level remaining will have surplus oil for their lifetimes.
Supply and demand, when there are less to demand, the supply expands.