The largest refinery in the Midwest will have an unpalatable choice if President Trump imposes tariffs on Canadian oil: Pay more for the crude that it transforms into gasoline and diesel, or slash production.
Both options threaten to increase prices at the pump, albeit modestly if Mr. Trump sticks with the 10 percent rate he announced this month.
It is not clear whether the tariff will take effect after Mr. Trump decided to hold it in abeyance until at least early March.
Yet this refinery, built around 1889 on the south shore of Lake Michigan, near Chicago, is a reminder of just how difficult it can be to undo trade ties that go back decades.
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Mr. Trump, like many American leaders before him, appears to be yearning for a kind of energy independence that experts say is impractical and would not benefit individuals or the oil industry.
“We don’t need their oil and gas,” Mr. Trump said last month, referring to Canada. “We have more than anybody.”
It boils down to this: No matter how much oil the United States pumps — and it already is the top producer in the world by far — its refineries were designed to run on a blend of different types of oil. Many can’t function well without the darker, denser, cheaper crude that is hard to find domestically.
Canada is flush with that oil, known as heavy crude. And facilities like this one, BP’s refinery in Whiting, Ind., were built around that supply.
Companies have little reason to spend billions of dollars reconfiguring their systems for trade policy that may be fleeting. Not to mention there is uncertainty about the trajectory of global demand for gasoline and diesel, which some experts think could peak in the next decade as more people buy electric cars as well as trucks that run on natural gas and other fuels.
“You can’t turn the Titanic on a dime, and the industry is kind of the same way,” said Rick Weyen, a retired refining executive who worked at the Whiting refinery for several years in the 1980s and ’90s.
Whiting, a facility of tanks, towers and more than 800 miles of pipelines, is among the most dependent in the country on Canadian oil. On any given day, between 65 percent and three-quarters of the crude flowing through it is of the dark, viscous variety found in the oil sands of Alberta. The rest is lighter, and much of it can come from Texas, New Mexico and other U.S. states.
BP can tweak its recipe — but only so much. Too little of the viscous stuff and the company would need to cut back its production of the fuels that power cars, trucks and airplanes. The refinery normally makes enough gasoline in a day to fuel more than seven million cars, or about 3 percent of the gas-powered vehicles on American roads.
The oil and gas industry, which was one of Mr. Trump’s biggest supporters in last year’s election, has urged him to exempt energy from the tariffs on Canada, saying the taxes could cause prices at the pump to rise. (During the campaign, Mr. Trump pledged to slash people’s energy bills by more than half.)
Both options threaten to increase prices at the pump, albeit modestly if Mr. Trump sticks with the 10 percent rate he announced this month.
It is not clear whether the tariff will take effect after Mr. Trump decided to hold it in abeyance until at least early March.
Yet this refinery, built around 1889 on the south shore of Lake Michigan, near Chicago, is a reminder of just how difficult it can be to undo trade ties that go back decades.
Advertisement
SKIP ADVERTISEMENT
Mr. Trump, like many American leaders before him, appears to be yearning for a kind of energy independence that experts say is impractical and would not benefit individuals or the oil industry.
“We don’t need their oil and gas,” Mr. Trump said last month, referring to Canada. “We have more than anybody.”
It boils down to this: No matter how much oil the United States pumps — and it already is the top producer in the world by far — its refineries were designed to run on a blend of different types of oil. Many can’t function well without the darker, denser, cheaper crude that is hard to find domestically.
Canada is flush with that oil, known as heavy crude. And facilities like this one, BP’s refinery in Whiting, Ind., were built around that supply.
Companies have little reason to spend billions of dollars reconfiguring their systems for trade policy that may be fleeting. Not to mention there is uncertainty about the trajectory of global demand for gasoline and diesel, which some experts think could peak in the next decade as more people buy electric cars as well as trucks that run on natural gas and other fuels.
“You can’t turn the Titanic on a dime, and the industry is kind of the same way,” said Rick Weyen, a retired refining executive who worked at the Whiting refinery for several years in the 1980s and ’90s.
Whiting, a facility of tanks, towers and more than 800 miles of pipelines, is among the most dependent in the country on Canadian oil. On any given day, between 65 percent and three-quarters of the crude flowing through it is of the dark, viscous variety found in the oil sands of Alberta. The rest is lighter, and much of it can come from Texas, New Mexico and other U.S. states.
BP can tweak its recipe — but only so much. Too little of the viscous stuff and the company would need to cut back its production of the fuels that power cars, trucks and airplanes. The refinery normally makes enough gasoline in a day to fuel more than seven million cars, or about 3 percent of the gas-powered vehicles on American roads.
The oil and gas industry, which was one of Mr. Trump’s biggest supporters in last year’s election, has urged him to exempt energy from the tariffs on Canada, saying the taxes could cause prices at the pump to rise. (During the campaign, Mr. Trump pledged to slash people’s energy bills by more than half.)
