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Canadian Oil Important for Midwest Gasoline Prices

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Abstract

U.S. imports of Canadian oil—a heavy sour crude—have doubled over the past two decades. Most of this oil is sent to Midwest refineries that specialize in processing heavy sour crude. These refineries have limited flexibility to substitute other types of crude without incurring the cost of switching equipment. As a result, higher prices for Canadian crude, including from tariffs, could lead Midwest consumers to pay higher prices on refined petroleum products such as gasoline, holding other factors constant.

Suggested Citation

  • Bobby Beckemeyer & Jason Brown, 2025. "Canadian Oil Important for Midwest Gasoline Prices," Economic Bulletin, Federal Reserve Bank of Kansas City, pages 1-4, May.
    • Handle: RePEc:fip:fedkeb:100047
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    File URL: https://www.kansascityfed.org/documents/10851/EconomicBulletin25BrownBeckemeyer0509.pdf
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    References listed on IDEAS

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    1. Kilian, Lutz & Zhou, Xiaoqing, 2024. "Heterogeneity in the pass-through from oil to gasoline prices: A new instrument for estimating the price elasticity of gasoline demand," Journal of Public Economics, Elsevier, vol. 232(C).
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