Oil and gas companies in the United States are bracing for the possibility that President Trump will thrust their businesses into disarray and will drive up prices at the pump by imposing 25 percent tariffs on goods from Canada and Mexico.
The United States is the world’s largest oil producer, but the country’s refineries are designed to turn a mix of different types of oil into fuels like gasoline and diesel. Roughly 60 percent of the crude oil that the United States imports comes from Canada, and about 7 percent comes from Mexico. Many refineries are set up to use those particular imports and cannot easily switch to oil from other places.
Analysts are not sure just how Mr. Trump’s tariffs might ripple through the oil market — and who would bear the added expenses. The costs may not be significant if the tariffs are in place only temporarily, or if the administration makes it easy for refiners to obtain waivers to keep buying Canadian or Mexican crude without paying extra.
Mr. Trump has said that the tariffs would take effect on Saturday. He has indicated at various points that oil might be subject to less severe penalties. On Friday, in response to a question about oil imported from Canada, Mr. Trump said he probably would reduce the planned tariff to 10 percent for that commodity. He previously suggested that he might exempt oil from the tariffs entirely.
The oil and gas industry was one of the biggest supporters of Mr. Trump during the 2024 election, giving more than $75 million to his campaign, and the president has made helping the industry, such as by loosening regulations, a key policy priority. He also promised to reduce energy costs for consumers.
A White House spokesman did not directly address how placing tariffs on energy imports would align with Mr. Trump’s goal of reducing prices. “His promises focus on building on the achievements of his first term and reversing the setbacks of the previous four years,” the spokesman, Harrison W. Fields, said in a statement before Mr. Trump’s Friday remarks.
Among those likely to take a hit if Mr. Trump does not exempt fossil fuels are Canadian oil producers and U.S. refiners, particularly those in the Midwest that process a lot of Canadian oil and lack a ready substitute. American consumers in regions that depend on oil from Canada also could see slightly higher prices at the pump, particularly if fuel makers were to respond by cutting production. If Mr. Trump were to move forward with 25 percent tariffs on oil, gasoline prices in the Midwest could climb 15 to 20 cents a gallon, with more muted effects in other parts of the country, said Tom Kloza, global head of energy analysis at Oil Price Information Service.
The United States also buys natural gas, electricity and uranium — an element used to make fuel for nuclear power plants — from Canada.
“It’s going to be very, very messy” if Mr. Trump moves ahead with tariffs, Mr. Kloza said. “We haven’t dealt with something like this, certainly not in the modern era.”
Already, refining is a tougher business than it was a couple of years ago, partly because U.S. demand for diesel has weakened.
Lower profit margins in fuelmaking weighed on the fourth-quarter results of the two largest U.S. oil companies, which reported earnings on Friday.
Exxon Mobil’s profit for the final three months of 2024 inched lower to $7.61 billion, from $7.63 billion a year earlier. Production growth in places like West Texas helped to offset a more challenging market for refining. The company’s results exceeded forecasts from analysts surveyed by FactSet.
“We have done the hard work to make sure that we’re competitively advantaged, and that’s going to hold us in good stead in any market environment,” Kathy Mikells, Exxon’s chief financial officer, said.
Chevron’s fourth-quarter profit rose around 43 percent year-over-year, to $3.24 billion, but it came up short of Wall Street’s expectations.
The average price of regular gasoline on Friday was $3.11 a gallon nationally, according to AAA, the motor club, in line with prices this time last year. In the Midwest, gasoline is generally cheaper than the national average.
Mr. Trump, in his first two weeks in office, has repeatedly invoked the threat of tariffs. Some policy analysts say that he is using the threats as a negotiating tool to spur countries to do what he wants. Last weekend, he announced 25 percent tariffs against another U.S. ally, Colombia, after its president balked at accepting U.S. military planes carrying deported immigrants. Within hours, Colombia acceded and Mr. Trump reversed course.
The American Petroleum Institute, the oil and gas industry’s main trade group, has urged the administration to exempt fossil fuels from any tariffs. It said in a December letter that such tariffs “would directly undermine energy affordability and availability for consumers while eroding the U.S. oil and natural gas industry’s competitiveness.”
Most oil produced in the United States is, in the telling of industry experts, akin to a light beer, while the crude imported from Canada and Mexico is more like a thick molasses. Refineries are set up to use a combination of the light and heavy oils.
U.S. fuel makers did not appear to be stocking up on Canadian oil, Mr. Kloza of OPIS said.
Valero Energy, one of the largest U.S. oil refining companies, has been planning for a wide range of scenarios and has flexibility because many of its refineries are along the Gulf Coast, near ports where oil can be imported from around the world, Gary Simmons, the chief operating officer, told financial analysts on a conference call on Thursday.
Eventually, though, the company might need to cut production if buying heavier oil were to become difficult, Mr. Simmons added.
Chevron also said on Friday that it recognized $715 million in severance charges in the final three months of the year, signaling job cuts on the horizon.
“We’ll see some organizational restructuring, and that will result in some changes to our work force,” Mike Wirth, the company’s chief executive, said in an interview. Chevron has not disclosed how many employees could be affected.
Employment in the U.S. oil industry has fallen roughly 25 percent over the past decade, even as oil and gas production have soared to record highs.
Darren Woods, Exxon’s chief executive, provided an update Friday on the company’s plans to supply power to data centers, saying Exxon could have a power plant running by 2028. On Tuesday, Chevron said that it, too, planned to sell electricity to data centers, saying it could have a power plant operating by the end of 2027.