Crude

US oil stocks popped and ours plopped after Trump whacked Venezuela. Coming off a year when Bay Street romped almost 30% higher, this was unwelcome. But no disaster.

The US king told the NYT on Wednesday he expects to be running the South American country, “for years”. The plan is for American oil companies to rebuild crumbling infrastructure, then pump their little black hearts out, enriching the US and spanking Venezuelans for ever having allowed the industry to be nationalized.

So, wassat mean for Canadian stocks? Our oil patch? Your RRSP? The varmint, feral separatist Wexit traitors now playing footsie with MAGA?

Well, relax, says Big Daddy. Canada won’t take a hit. Our oil is fairly priced, far lower-risk and cleaner, he said while munching a croissant in Paris. “We’ve got a competitive product and we’ve been diversifying our markets and that’s one of the reasons why we signed the comprehensive MOU with Alberta.”

For context, Venezuela ships only 1% of the world’s oil, so global markets mostly yawned when Maduro went down. Crude prices have been under pressure for months because of a oversupply – which is why the stuff slipped under $60 US a barrel some time ago. Events of last week just made it a little cheaper (as ChatGPT writes this blog post the black stuff is at $57, up almost 2% on the day. Just kidding. I mean about the chatbot. Seriously. But her name is Maddison.)

Still, Venezuela has massive oil reserves. The stuff it pumps is also very similar to what Alberta produces. And Trump is obsessed with stealing it and feeding American refineries. So, yeah, there’s a threat since virtually all of the Canadian exports currently flow south to America.

Meanwhile this week Trump announced the US will soon be taking at least $2 billion worth of oil out of his new conquest. This is equal to about two days’ worth of US consumption – not enough to impact world prices. Or us.

Yesterday economists at TD issued a report on why all of this will have “a low impact” on Canada – but more potential impact on Alberta. This is why…

• “Any imports of Venezuelan oil to the U.S. would compete directly with Canadian crude in the Gulf Coast market, which currently receives only 10% of total Canadian shipments to the U.S. A more probable outcome is that only a limited portion of Canadian oil would be substituted, with relatively modest impacts on the national economy.  Alberta could experience more significant effects, but only in the event of a complete near-term and sustained transition to Venezuelan oil in the Gulf Coast.
• “Total Canadian crude exports to the United States are around four times greater than Venezuelan exports, with ~70% of that consumed in the U.S. Midwest. The U.S. Midwest imports almost exclusively from Canadian sources due to existing pipeline infrastructure. For Venezuelan crude to reach the Midwest, extensive modifications to pipelines would be required to enable south-to-north flow—a process that presently does not make much economic sense and that would require significant time to implement.
• “Longer-term, significant U.S. investment would be needed to boost oil output and increase pipeline capacity in Venezuela. This strengthens the case for Canada to expedite a new oil pipeline that builds out capacity for Asian shipments. China, the number one buyer of Venezuelan crude, may need to strategically reorient their import sources, further buoying the case for Canada to diversify its energy trade.”

If you buy this analysis, it’s a nothingburger for the feds, but a (maybe) future negative for AB. More likely, if Trump succeeds in getting billions pumped into Venezuela and increased oil flowing out, is a further drop in the world price. He might augment that with a release of US strategic reserves, to drive down gas prices and try to save his butt in November’s midterm elections. So, our oil export revenues would take a hit. Bay Street might slump a little. Still a yawn.

The bigger threat?

Trump unleashed. The US is ready to take over Cuba as that economy collapses. There are plans in the White House to annex, buy or rip off Greenland. He wants control of Panama. The isolationism he campaigned on has turned into imperialistic expansion. Party like it’s 1898! Manifest Destiny, baby. A recipe for chaos.

Given the stress his agenda has brought to domestic politics, the president may see his legacy as that of the man who most greatly and grandly expanded America’s borders. It will go so well with the Trump coin, the Trump Kennedy Centre, the Trump class battleships, the Trump trust accounts for babies, the Trump immigration gold card and, of course, the Trump Ballroom.

Oh, and Minnesota.

Don’t dump your Canadian oils. Or your TSX fund. We still rock.

About the picture: “I expect that you get thousands of dog photos but I couldn’t resist,” writes Voytek. “This one is entitled: I want this one! Lago is 2 years old Lagotto and lives with us in France. It is Italian water dog but if you have a pool it becomes Italian pool dog. Enjoy. Thanks for your blog and enjoy the photos.”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

Source: https://www.greaterfool.ca/2026/01/08/crude-2/