It seems there are oil guys here.
My rookie oil industry analysis is that here in the US, our product is good for making gasoline but we need Venezuela, Russia, or Canada products (sour crude?) to make diesel. Saudi makes light sweet crude if that's the proper terminology?
If we get permanently sideways with Canada oil, do we produce gas and LNG and get a price increase to import diesel? Where does this appear to go?
There are three broad categories of refinery; topping, cracking and coking. Topping refineries are the least complex and largely gone. There are two small ones still operating in Alaska I believe.
Cracking refineries can run heavy or
Light crude depending on their metallurgy. However, they have no resid conversion capability so when they run heavy sour they have to make a lot of residues or asphalt.
Coking refineries are the most complex, expensive and profitable. These are designed for heavy sour crudes and have the ability to convert residues/asphalt into crude.
Heavy sour crudes processed in the US are typically from Canada and Venezuela, although some heavier middle eastern crudes do find their way here.
Two of our most important heavy crude refineries are in Wood River, IL and Pine Bend, MN. Wood River takes heavy sour from Venezuela and Canada. Pine Bend processes primarily Canadian crude.
If Canadian crude went overland to the West Coast, these refineries would have a serious problem. They are not configured to profitably run WTI or other lighter crudes. They are also not in the best spot to receive these crudes. What you end up with is a local fuel shortage that has to be made up with pipeline shipments.
Refined products are a global commodity priced by transport from clearing hubs. Our clearing hubs are New York Harbor, Houston, and LA. The major hub this would impact is Houston. It would likely go up relative to the other hubs and the pipeline tariffs would set the price from Houston into the midcontinent. Your guess is as good as mine on what these tariffs might do. They won’t go down.
