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Jesse and Heatmap deputy editor Jillian Goodman talk Canadian tariffs with Rory Johnston.

On February 1 — that is, three days from now — President Donald Trump has promised to apply a tariff of 25% to all U.S. imports from Canada and Mexico, crude oil very much not excepted. Canada has been the largest source of American crude imports for more than 20 years. More than that, the U.S. oil industry has come to depend on Canada’s thick, sulfurous oil to blend with America’s light, sweet domestic product to suit its highly specialized refineries. If that heavy, gunky stuff suddenly becomes a lot more expensive, so will U.S. oil refining.
Rory Johnston is an oil markets analyst in Toronto. He writes the Commodity Context newsletter, a data-driven look at oil markets and commodity flows. He’s also a lecturer at the University of Toronto’s Munk School of Global Affairs and Public Policy and a fellow with the Canadian Global Affairs Institute and the Payne Institute for Public Policy at the Colorado School of Mines. He previously led commodities market research at Scotiabank. (And he’s Canadian.)
On this week’s episode of Shift Key, Jesse and Jillian attempt to untangle the pile of spaghetti that is the U.S.-Canadian oil trade. Shift Key is hosted by Jesse Jenkins, a professor of energy systems engineering at Princeton University, and Jillian Goodman, Heatmap’s deputy editor. Robinson Meyer is off this week.
Subscribe to “Shift Key” and find this episode on Apple Podcasts, Spotify, Amazon, or wherever you get your podcasts.
You can also add the show’s RSS feed to your podcast app to follow us directly.
Here is an excerpt from our conversation:
Jesse Jenkins: I want to come back to what would happen if Trump did impose these tariffs, but before we get there, I think it’d be helpful just to understand a little bit more about what life looks like on either side of the border.
You mentioned that Canada has become dependent on the U.S. market for export. My understanding is that the refineries in the Midwest — because they are now used to just using a single source of crude rather than, say, a coastal refinery that might have to be more flexible because they could get crude from Venezuela one day and from Saudi Arabia another day, or something with different qualities. My understanding is that the refineries in the Midwest have become pretty specialized and optimized around refining specifically Canadian crude. Is that correct? And if so, what, what are the features there? How challenging would it be for refiners to switch to other supply in the U.S. if all of a sudden Canadian crude becomes 25% more expensive?
Rory Johnston: Yeah, and you’re absolutely right. So — and I had mentioned earlier, that one aspect of this entrenched relationship is this physical infrastructure, and this other point is this business mode optimization around the specific blend of crude.
Now, for those that aren’t aware, crude oil is not one thing. It is an endless cornucopia soup of hydrocarbons that, generally, we can divide along a two-part axis. On the one hand you have gravity or density, or weight of the crude. And then the other side you have sulfur concentration. Sulfur concentration is always bad because, you know, sulfur’s bad — acid rain, we want to get rid of that. So that costs money to extract. And then the density or the gravity, we talk about this in API gravity. The U.S. crude, like shale crude — that’s often what we call light, tight oil — is often 40 degrees API gravity or higher. It’s very, very, very light. That’s lighter even than WTI, the benchmark itself, whereas Canadian Western Canada select, which is the kind of primary export blend of Canadian crude, is at 22 degrees gravity. Way, way, way, way heavier. One of the heaviest major marketed crudes in the world and the largest, heaviest, marketed grade in the world in terms of size of the particular flow.
So what happens is, well, when you look at the actual blend that is consumed by U.S. refineries, it’s not that they consume a heavy blend of crude. Their blended refinery slate is more of a medium grade. But they have so much light crude, particularly from areas like the North Dakota Bakken, that they need heavy crude to blend and get that kind of medium grade in the middle.
So — to your point, though — that needs to happen. And particularly if you want to, let’s say, keep consuming more U.S. domestic crude in the United States, then you need heavy crude to blend with it to meet those refinery specifications.
This episode of Shift Key is sponsored by …
Intersolar & Energy Storage North America is the premier U.S.-based conference and trade show focused on solar, energy storage, and EV charging infrastructure. To learn more, visit intersolar.us.
Music for Shift Key is by Adam Kromelow.
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The proposal resolves an issue that has bedeviled the industry since 2022.
Is Rosemont about to be BAAJA blasted away?
In a 2022 decision formally titled Center for Biological Diversity v. U.S. Fish & Wildlife Service, the Ninth Circuit Court of Appeals ruled that Rosemont Copper Company its claim under the General Mining Act of 1872 did not give the company license to dump literally millions of tons of waste rock on adjacent Forest Service land. Though Rosemont argued that the use fell under the law’s provisions for “mill sites” on public lands used for mining, the court found that because the parcel in question lacked valid mining claims of its own, the Mining Act did not justify its use under its own permissive regime.
The conservative energy group ClearPath Action described the decision as “a significant departure from long-held mining practices.” Industry groups said that the decision would vastly extend and complicate the process of mining on public lands by putting areas with mineral claims into a separate legal and permitting category from adjacent land that had customarily been considered part of the mining development.
Almost immediately after the court decision, the mining industry and its allies in Congress got to work trying to “fix” the Rosemont decision in order to restore the pre-2022 status quo.
One proposed fix — the Mining Regulatory Clarity Act — has been introduced several times in both houses of Congress, including as far back as 2023 in a Senate bill co-sponsored by Catherine Cortez Masto of Nevada and Jim Risch of Idaho.
Another version of the bill, sponsored by Nevada Republican Mark Amodei, Nevada Democrat Steven Horsford, and Alaska Republican Mark Begich, passed the House of Representatives late last year with a handful of Democratic votes. Both bills would have explicitly established that miners could claim public land for waste rock disposal as long as it was “reasonably necessary” and “reasonably incident” to mineral development.
Now they may all be getting their wish. The comprehensive permitting bill introduced by Republican and Democratic leaders in the Senate known as the Bipartisan American Affordability and Jobs Act, includes the full text of the Mining Regulatory Clarity Act
Both parties have been trying to jumpstart the domestic mining and critical minerals industry, especially for materials key to energy sectors, such as copper and lithium. The long lead time it takes to permit and open a mine is one of the major barriers to developing the domestic mining industry (along with nasty price competition from overseas miners and refiners, especially those controlled by Chinese firms).
This is not the first time a bipartisan permitting bill has included what’s known a “Rosemont fix.” There was also one in the 2024 Energy Permitting Reform Act, and in the Senate FREEDOM Act introduced by Cortez Masto and Arkansas Republican Tom Cotton this past summer.
You may have noticed lots of Nevadans associated with these bills. That’s because “Nevada is to mining as Texas is to oil and gas,” Aaron Mintzes, deputy policy director of Earthworks, a frequent and vigorous adversary of the mining industry, told me
While environmental groups generally supported the Rosemont decision, some groups supporting the clean energy industry backed the Mining Regulatory Clarity Act, including Bipartisan Policy Center’s lobbying arm, the clean energy trade group Advanced Energy United, and the Zero Emission Transportation Association, which includes several copper and lithium companies among its members. (Mintzes described ZETA as “the lithium mining lobby” and an “outlier” among clean energy groups in supporting the Mining Regulatory Clarity Act.)
Instead of a technical fix that would comply with the spirit of existing law, Mintzes described the changes to mining regulation in BAAJA as giving mining companies “a nearly unlimited amount of public lands for their waste dumps, for their roads, for their pipelines, for their transmission lines, and for any other purpose that would be reasonably incident to mining.” That goes beyond the mill sites envisioned by the 1872 law, he said.
The National Mining Association, on the other hand, praised the bill Wednesday, with its president Rich Nolan saying in a statement that the existing permitting process is “mired in duplication, endless litigation and uncertainty,” and that “elected officials on both sides of the aisle have long acknowledged that the status quo cannot continue.”
Albert Gore, the executive director of the Zero Emission Transportation Association, told me that there was a “broad recognition” among miners, refiners, and operators that the Rosemont decision required a statutory fix.
“It needed to be clarified in order to remove uncertainty. It's hard enough to invest in mineral production in the United States,” Gore said.
BAAJA’s mining provisions also include the Abandoned Hardrock Mine Fund, which would be funded by maintenance fees collected by the Department of the Interior under the same 19th century mining law. This fund would support a program established by the 2021 Bipartisan Infrastructure Law to clean up abandoned mining sites.
In a transcript of a strategy call between environmental organizations on the BAAJA published by Punchbowl, Mintzes described the fund as “the one good thing I spotted in this bill so far.”
Exploratory projects are making a splash in Maine and Alaska.
A legal brawl is brewing over what could be the nation’s first underwater data centers.
Two subsidiaries of a new LLC named DeepGreen have applied for “preliminary” permits from the Federal Energy Regulatory Commission that would give four years of permission for studies and analysis towards constructing underwater data centers off remote coastlines in Maine and Alaska. The data centers as proposed would be powered entirely by tidal energy, as in, the power of waves themselves – a technological innovation from hydropower still being piloted around the world. Project descriptions submitted to FERC lay out what these data centers would look like in broad strokes: hundreds of hydrokinetic turbines, dozens of underwater “data center pods,” and miles of subsea cable. The permits would not authorize construction, which would need its own lengthy review process. But these early green lights would tee both areas up for years of potential conflict over hypotheticals that feel real to those on the ground.
There are upsides from purely a carbon emissions perspective. Relying on tidal energy suggests they’d be greenhouse gas-free, powered by the energy of the ocean. It would also eliminate the land use problem that upends so many AI data center projects. There are also clear environmental risks, as they’re also being suggested in ocean areas often coveted for protection, off coastlines where it’s unclear if the neighboring communities will accept them.
DeepGreen’s Alaska project is proposed within a more than 1,000-acre channel of the Cook Inlet, an estuary coveted by fishermen and wildlife conservation advocates, where fights over resource development already occur often. The upstart company’s Maine project is planned for the northernmost tip of the state, in the Bay of Fundy, which shares a transnational border with Canada. Canadian tidal power generation for the general populace marginally exists today in the Bay of Fundy – with major stipulations for marine life protection because it affects the general nature of water currents.
It’s crucial to note neither project has much information available online, sans brief text file project descriptions available through FERC’s online filing database. There is no public-facing website to date for the project, or for DeepGreen itself. When I contacted Louis Wolfson, a vice president at the company who is listed on company filings, he declined to talk about the developments over the phone and suggested I contact him at an email address listed in FERC application documents. That email address uses a website – “DeepGreenCoastal.com” – that does not seem to exist.
Still, we already know enough to say both development areas are likely to require substantial federal review. Not only does their presence in these waters almost necessitate it but both development areas receive considerable whale traffic. DeepGreen has already acknowledged a need to coordinate passive acoustic monitoring and “non-invasive study methodologies” with the National Marine Fisheries Service, the federal marine protection agency run out of NOAA. The Bay of Fundy is a prominent summer home for the endangered North Atlantic Right Whale and the National Marine Fisheries Service has already intervened in the FERC case for the Maine project, signalling in its filing that Endangered Species Act and fish habitat consultations “may be necessary for the project.”
The Center for Biological Diversity has also filed motions to intervene in both FERC cases, which they tell me is a prelude to potential litigation. “Putting one of these in the ocean just seems like a dystopian nightmare but it was especially alarming because of the areas they want to put these in,” Kristen Monsell, CBD Oceans Program Litigation Director, told me in an interview. “[The motions] are a step required in order for us to participate in the permitting process at FERC and then preserve our ability to challenge the decision in court if we think that’s necessary.”
In Maine, the coastline neighbors are the city of Eastport, which is vociferously opposed to this data center being built. The city passed a moratorium on data center development in response to the project and filed a request to intervene in its FERC case this week. “The City's concerns include potential effects on fisheries, marine habitat, water quality, currents, sediment, underwater noise, electromagnetic fields, equipment heat, existing uses of the waterway, and access to marine resources,” the city stated. “Questions also remain about equipment failure, storm damage, emergency response, equipment recovery, site restoration, and eventual decommissioning. These concerns are specific to the proposed placement and extended operation of computing and energy infrastructure on and beneath the seabed.”
In Alaska, DeepGreen doesn’t face a situation like Eastport with a bustling tourist destination-turned-nemesis, but there’s still quite a bit of local confusion and consternation.
The Kenai Peninsula Borough, which is the equivalent of a county-level government, is currently neutral on the development. But the Alaska Commercial Fisheries Conservation Alliance, a newly-formed nonprofit that includes fishing permit holders in the Cook Inlet, submitted a filing to FERC claiming the project site doesn’t properly take into account existing fishing permit holders and that “a preliminary permit proceeding that advances a project of this scale without any commercial fishing impact assessment” would fail the agency’s public interest obligations.
I asked DeepGreen if it had any comment on the litigation risk around their projects. This is what Louis Wolfson provided: “Preliminary permits under the Federal Power Act do not authorize construction or physical disturbance. Their sole purpose is to establish priority while environmental, bathymetric, and technical feasibility studies are conducted. Stakeholder participation is an expected and healthy part of the FERC regulatory process. DeepGreen welcomes the engagement of conservation organizations, local communities, and regulatory resource agencies as we evaluate whether these sites can deliver low impact, zero carbon infrastructure in full compliance with federal environmental laws."
And more of the week’s biggest fights around project development
1. Ottawa County, Michigan – A congressional district House Democrats are targeting for control of the Lower Chamber is now a battleground over solar development on farmland, and I’m waiting to see if President Trump gets involved.
2. Texas – The Lone Star State sure is action-packed right now, huh? Let’s break down a few of the most important fights.
3. Lincoln County, Oklahoma – A massive wind project in rural Oklahoma is now on hold amidst continued local opposition, according to a Republican member of the state legislature.
4. Clinton County, Indiana – Well hey, at least some places are still approving some things. Like in rural Indiana, where a community actually voted for considering a data center.