Note from the Editor: Columnist Charlie Garcia presents selected emails from his virtual mailbag every Friday.
Your ability to defend Canadian energy while also conveying why many investors hesitate to engage with it is precisely why I read your column. You neither flatter your audience nor ignore the complexities at hand.
That being said, there are two concerns you didn’t touch upon that I believe are crucial to the thesis surrounding Canadian Natural Resources CNQ:
It’s also notable that Warren Buffett invested in Canadian tar sands but has since divested that position. Whether that supports or challenges your argument is open for discussion, but it deserves mention.
I look forward to your insights.
Will
Thank you for engaging, and I appreciate the thoughtful counterpoints. You pinpointed precisely the risks I failed to address — suggesting either my oversight or the idea that they might be less significant than commonly believed. Let’s call it even.
Regarding Trump’s tariff initiatives: Valid concern. Trump discusses tariffs as my uncle discusses conspiracy theories — vocally, often, and with scant attention to consequences.
The issue with imposing tariffs on Canadian oil is that the U.S. is reliant on it. Canada accounts for 60% of U.S. oil imports — around 4.3 million barrels daily. It’s impractical to impose tariffs when American refineries rely on heavy Canadian crude.
Trump imposed tariffs on Canadian steel and aluminum. He considered tariffs on Canadian lumber, dairy, and automobiles. However, he never genuinely threatened oil because it would cause outrage among energy companies. Gulf Coast refineries were specifically designed to handle heavy crude. Transitioning to light sweet crude from Texas would necessitate monumental retrofitting costs.
Could he attempt it? Certainly. He once imposed tariffs on washing machines. Nevertheless, taxing Canadian oil would lead to a spike in gasoline prices in pivotal states, which is a political miscalculation. Even Trump recognizes that voters are more concerned about $5 gas than trade agreements.
Risk? Indeed. Likely? Unlikely. Politically unwise? Absolutely.
On OPEC: OPEC does not advocate for lower oil prices. Their focus is on market share — which can sometimes involve saturating the market to eliminate high-cost producers. They attempted this in 2014 and 2020. Weak producers failed. CNQ thrived.
