Headline: US Fuel Prices Set to Increase by 15 Cents Per Gallon Due to Tariffs

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American drivers may experience a significant spike in fuel prices, with an estimated increase of around 15 cents per gallon, as a result of recent tariff announcements by the Trump administration.

The US is imposing a 10% tariff on oil and refined products imported from Canada, disrupting the American refining and fuel markets that rely heavily on Canadian crude. While Mexico has also been subject to potential trade restrictions, a 25% tariff has been delayed by a month.

According to Andy Lipow of Lipow Oil Associates, the 10% tariff will translate into a gasoline and diesel price hike of roughly 15 cents per gallon. The impact on consumers will vary depending on their geographical location.

The West Coast, which already experiences the highest gasoline prices in the US, could witness a surge of up to 20 cents per gallon. If Canadian oil producers redirect supplies away from the Midwest, localized shortages could drive prices even higher, exceeding 30 cents per gallon.

The tariffs coincide with maintenance-related output cuts at US refineries, reducing the availability of domestic product to offset potential supply reductions from Canada.

States in the Northeast (Massachusetts, Vermont, and New Hampshire) and those in the western region (western Pennsylvania, Montana, and Washington) rely heavily on Canadian gasoline, diesel, and crude oil imports, respectively. Major Northeast supplier Irving Oil Ltd. has already notified New Hampshire customers of propane price increases due to the tariffs.

While the nationwide average for gasoline prices hovered around $3.10 per gallon last weekend, with diesel at $3.70, immediate price hikes are unlikely, according to Pavel Molchanov of Raymond James. He estimates a three to four-week delay between oil price fluctuations and corresponding changes at the pump, meaning drivers may notice the impact by late February.

However, retail prices in areas that depend more on Canadian oil supply could experience fuel price spikes sooner. States like Maine, where fuel retailers largely purchase their product from spot markets priced at the New York Harbor, could face immediate price pass-throughs if tariffs elevate prices at that key benchmark.

The tariff's impact is already evident in futures markets, with NYMEX gasoline futures witnessing a surge of 13.2 cents on Monday, the largest intraday move since March.