Topline:
The idea that the US can walk away from Canada’s oil is droll, baby, droll.
Kudos to CNN for finally explaining to me what “light, sweet” crude is.
Like I’ve been saying, “Drill Baby Drill” is a slogan for low information voters, but does not reflect the real world. Trump energy policy is a mess. The clean energy transition is unstoppable, but if this crowd doesn’t change course, we’re headed right into a depression ditch.
Oil falls on a spectrum from light to heavy, depending on how much sulfur it contains. The recent shale revolution — with new fracking methods extracting more oil from Texas, New Mexico and North Dakota — has pushed the US to become the biggest oil producer in the world. It’s also generating an expensive, light crude oil, which made up most of what the US exported in 2024: 4.3 million barrels per day.
Oil experts call it “the champagne of crudes.”
But that is not the kind of oil that has powered cars and industry in the US for decades. America was built on a thick, gunky crude that comes from other countries including Canada, Saudi Arabia and Central and South American nations.
“All crude is not the same,” said Bob McNally, president of consulting firm Rapidan Energy Group. “Some crudes are like coffee grounds — they’re gunky, awful, viscous, dirty. Some crudes are like champagne, light and un-sulfurous.”
The US pumps a lot of home-grown champagne out of the ground; a full 80% of the oil produced here is light crude, according to the Energy Information Administration.
“It’s much lighter and sweeter,” said Hugh Daigle, an associate professor at the University of Texas Austin and an oil expert. “It’s less viscous.”
Meanwhile, the US uses a lot of “coffee-ground” oil. The nation imports around 6.5 million barrels of crude oil a day from others — most of it either heavy- or medium-density. By far the biggest source of US oil imports is its northern neighbor, Canada, which sent 1.42 billion barrels of crude oil to America in 2023.
Most Canadian oil comes from Alberta’s tar sands region, where the oil looks like asphalt, molasses or coffee grounds. It’s the reliance on Canada’s crude that’s triggering fears of higher gas prices if Trump follows through on his threat to implement a 10% tariff on Canadian energy.
Trump recently claimed the US could get along just fine without Canadian oil.
“We don’t need their oil and gas; we have more than anybody,” Trump said at the World Economic Forum last month.
There’s a lot that goes into oil companies’ business calculations, said Jenna Delaney, a Rapidan Energy Group analyst focusing on global crude.
“It’s complex, it’s regionally specific and it’s a lot more complicated than saying, ‘we produce this crude, we should use all of it and not export any of it,’” Delaney said.
Trump’s idea to use only US oil is simply not realistic, experts told CNN. Doing so would throw US refineries into turmoil, and gas prices could skyrocket as a result.
“We’ll be importing Canadian oil for the foreseeable future, as far as I’m concerned,” Daigle said.
Despite Trump’s full-throttle push to “unleash” U.S. energy, Permian oil producers are keeping their foot on the brakes. At a Houston conference this week, energy executives made it clear that while production is still growing, the breakneck pace of the past decade is history.
In 2025, Permian output is expected to rise by about 250,000 to 300,000 barrels per day (bpd), down from last year’s 380,000-bpd increase. That’s a 25% slowdown, and it’s not just because of market conditions—it’s intentional.
On Thursday, Chevron’s Barbara Harrison summed up the mood to Reuters: “We still expect to see growth in the Permian, but we expect to see that moderated.” In other words, U.S. shale is no longer in “drill, baby, drill” mode. Instead of chasing volume, companies are focused on keeping costs in check and delivering returns to investors—a stark contrast to the reckless production boom of the 2010s.
Even though the U.S. remains the world’s top oil producer at 13.2 million bpd, capital discipline is the new mantra. Coterra Energy’s Shannon Flowers spoke of the irony: “The Trump administration wants lower energy prices. That’s not necessarily good for producers.”
Refiners like Delek are bracing for potential supply constraints as these producers hold back. And with Trump’s tariffs on Canadian and Mexican imports looming, there’s even more uncertainty in the mix.
Bottom line: The days of unbridled U.S. shale expansion are over, oil executives say. The industry is moving cautiously, balancing supply growth with financial discipline. Trump may want a flood of new production, but Wall Street wants profits. Right now, Wall Street is winning.
Not quite right. ‘Light’ means the average length of the carbon chains is low. AI tells me ‘light’ is C5 to C12, but mostly round 6 to 8. ‘Heavy’ has C14 and over. ‘Sweet’ means low sulfur. Fracked oil is light, the molecules have had to seep through the pores in the rock holding them. Canadian tar sands, as the name suggests, and Venezuelan crude, are heavy. That’s what the Gulf refineries are optimised to process – they break down the long, tarry chains into diesel and gasoline, with heat and catalysts, and by adding hydrogen.
Yes, CNN gets it wrong (surprise, surprise), but the diagram shows the correct nomenclature.
O, Canada….