Trump’s Energy Policies Poised To Reshape Oil & Gas Market: Winners And Losers Revealed

Introduction

The incoming Donald Trump administration’s ambitious energy plans, which include a 3 million barrels per oil equivalent a day (mboe/d) production boost and potentially imposing a 25% tariff on Canadian oil and gas imports, alongside accelerated liquefied natural gas (LNG) export approvals, may significantly alter the U.S. energy landscape. Goldman Sachs recently conducted a comprehensive analysis, dissecting the realistic potentials and speculative elements involved in Trump’s energy policies, as well as their implications for various stakeholders in the market.

Can The US Really Pump An Extra 3M Barrels a Day?

President Trump’s objective of enhancing U.S. energy production by 3 mboe/d from 2025 to 2028 has garnered attention for its ambition. However, Goldman Sachs indicates that such a feat is not out of reach. According to Callum Bruce, CFA, these targets are “achievable” as they encompass natural gas and natural gas liquids (NGLs), which are crucial components of the overall production.

Historical data highlights that U.S. energy production grew at an annual rate of 1.8 mboe/d between 2018 and 2023, which is more than double the required pace of 0.75 mboe/d to meet the proposed goals. For 2025 and 2026, Goldman anticipates growth rates at 2.0 mboe/d, indicating that if Trump were to secure a second term, around two-thirds of the production target could be realized within those two years. Key drivers behind this anticipated growth include rising LNG demand, capital discipline among producers, and escalating energy prices. However, it’s important to understand that policy changes may yield limited impacts in the short term.

What A 25% Tariff On Canadian Oil Could Mean

The proposed 25% tariff on Canadian oil imports raises pertinent questions, considering Canada is the U.S.’s largest supplier, contributing 4.0 million barrels per day (mb/d)—approximately 25% of total U.S. refinery inputs. Notable market players like Marathon Petroleum Corporation, Phillips 66, and Exxon Mobile Corporation heavily depend on this supply.

Goldman Sachs’ findings suggest that the immediate repercussion of imposing such a tariff would be elevated gasoline prices borne by U.S. consumers. Over time, however, Canadian producers would likely face pressure as they might be compelled to discount their oil prices significantly to remain competitive. For instance, Western Canadian Select (WCS) crude, currently priced near $60 per barrel, could see a tariff-induced price adjustment of roughly $15 per barrel, thereby incentivizing U.S. refiners to look for cheaper alternatives.

Tariffs On Canadian Gas: Who Pays?

Conversely, the implications of a 25% tariff on Canadian natural gas imports tell a somewhat different story. With Canadian gas exports to the U.S. averaging between 5-6 billion cubic feet per day (Bcf/d)—which constitutes about 5% of U.S. supply—the short-term effects would predominantly squeeze Canadian producers due to their vulnerability in the current oversupplied market.

Goldman’s projections indicate that a 25% tariff could reduce U.S. imports by about 200 million cubic feet per day, largely impacting Canadian producers initially. However, as U.S. gas balances begin tightening from 2026 onward, driven by increased LNG exports, it’s plausible that more of the tariff’s burden could eventually be absorbed by American consumers.

LNG Exports: Speeding Up Approvals Won’t Move the Needle (Yet)

The report casts doubt on whether expediting U.S. Department of Energy (DoE) approvals for LNG export projects can materially influence global or domestic gas balances before 2027. According to Bruce, while DOE approval is an essential precursor, it alone is insufficient to ensure the progress of new LNG projects. The challenges posed by securing long-term capacity contracts and the protracted nature of construction processes remain significant hurdles. Nonetheless, U.S. LNG exports are projected to more than double by 2030, reaching 25 Bcf/d, thereby increasing the U.S.’s global market share from 22% to 31%.

Bottom Line: Winners And Losers

Goldman’s analysis presents a nuanced view of the potential implications of Trump’s energy policies. The expected boom in U.S. production could uplift domestic energy output. However, the ripple effects of tariffs and policy changes introduce a layer of unpredictability in market responses. Here’s a concise breakdown of potential market impacts:

• U.S. Consumers: Likely to confront higher gasoline prices in the immediate aftermath of Canadian tariffs.
• Canadian Producers: Will experience pressure from lower prices for both oil and natural gas.
• U.S. Producers: Positioned to take advantage of increased domestic production targets and rising LNG exports.
• Midwest Refiners: Will face margin pressures but may negotiate deeper discounts on Canadian crude to mitigate impacts.

In summary, the future of the U.S. energy market hangs in a delicate balance, influenced by policies that, while ambitious, may yield uneven outcomes for different stakeholders across the sector.