Good morning, here's what the Oilman has for you today:

• Can Trump Really Slap Tariffs on Canada Oil?

• Gas Producers Set for 2025 Ramp-Up

• Tweet of the Day

Can Trump Really Slap Tariffs on Canada Oil?

President-elect Donald Trump shook the continent last week.

He declared he’d slap 25% tariffs on all imports from Canada and Mexico.

It was a punishment for illegal immigration and drug trafficking, he said.

But as the dust settles, let’s invite common sense back into the room.

Tariffs on vital commodities are not exactly a good idea

Let’s put it like this: Canada needs the U.S. The U.S. also needs Canada.

Canada’s top export south is petroleum.

That makes it vulnerable to punitive U.S. policies, for sure.

But those policies would punish U.S. refiners as well.

Because they don’t have a lot of alternative suppliers for heavy crude oil.

Venezuela and Russia are both heavily sanctioned.

And Canada is nearby, so its oil is cheaper.

But slap a 25% tariff on it and it stops being cheaper—and so does gas at the pump.

Trump has promised lower fuel prices.

Tariffs on Canadian crude are definitely not the way to do it.

So he will probably exclude oil imports from the tariff punishment.

Diversification is always a good idea

Some 75% of all Canadian exports end in the United States.

That’s quite a dependency on the neighbor.

As Trump has demonstrated, that neighbors won’t always be friendly.

Perhaps Canadian energy industry leaders might want to start thinking harder about those global markets.

Gas Producers Set for 2025 Ramp-Up

U.S. natural gas production is set for a jump next year.

After years of depressed prices, the tide is turning.

And drillers are ready to ride it.

From a drop to a surge

This year, nat gas production will decline for the first time since 2020.

But next year, this is going to change.

And it’s going to change radically.

Spot market prices for 2025 are seen rising by as much as 40%.

Reason enough for a sizable ramp-up in output.

All thanks to an expected rebound in LNG exports.

Well, that and those data centers, of course.

This is all according to the EIA.

It also forecasts that Natgas demand will break another record this year.

And it will break that again in 2025.

But there is a but as there always is.

Gas drillers will probably not rush to pump at will.

Not before prices do rise, signaling demand growth.

They have had time these past couple of years to learn a lesson.

It’s a simple lesson, and they probably learned it well.

Don’t add more supply to a well-supplied market.

Adding production “a little bit” at a time

Gas executives are appropriately guarded in their plans.

They are talking about production growth—but modest production growth.

When demand really takes off, production will follow.

But not the other way around.

First, producers need to heal the price wounds from the last few years.

Tweet of the Day

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