US president Donald Trump's impending tariffs on Canadian crude would cause US midcontinent refineries to cut throughputs, even if they find alternative crudes, US independent refiner PBF Energy said today.
The tariffs would cause a sizable disruption and "have some impact on throughput," chief executive Matthew Lucey said on an earnings call.
Switching to alternative crudes would lead to lower yields of gasoline, diesel and other fuels because refineries are optimized around a certain type of crude, he said.
Lucey described the US-Canada tariff situation as a "standoff" because US refiners need Canadian crude to maintain throughput while Canada needs the US market to avoid production cuts.
"If they don't sell it to the US, it's going to stay in the ground," he said.
PBF operates a 173,000 b/d refinery in Toledo, Ohio, which runs a significant slate of synthetic crude out of Canada.
The US will impose a 10pc tariff on energy from Canada and a 25pc tariff on all imports from Mexico starting on 4 March, after Trump delayed the tariff by a month.
US refiners' runs of Canadian crude averaged about 4mn b/d over the past year, or about 22pc of total US throughputs, according to US investment bank Tudor Pickering. Most of that crude feeds large midcontinent facilities. The region as a whole consumes about 70pc of US crude imports from Canada, with the balance going to the US Gulf coast.
US refiners who rely on Canadian crude imports are seeking alternative sources. US refiner Marathon Petroleum said last week it could run some domestic crudes in its midcontinent refineries, including crude from the Bakken shale in North Dakota and Montana, to replace Canadian imports.
