State officials forecast higher energy prices because of Trump tariffs
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State economic officials are predicting higher prices in Minnesota because of a 10 percent tariff imposed on Canadian energy imports this week by the Trump administration.
Minnesota, along with several other northern states, is heavily reliant on Canada to meet its energy needs.
"Minnesota is kind of disproportionately impacted here, and so while we have long term plans to make us less vulnerable to this, right now we're really going to see some strain on pocketbooks,” Minnesota Department of Commerce Commissioner Grace Arnold said.
Five of the six pipelines that carry natural gas to Minnesota come from Canada, Arnold said. That natural gas is used to heat tens of thousands of homes and buildings across the state.
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Several pipelines also carry Canadian crude oil to two refineries in the Twin Cities region, along with a third refinery in Superior, Wis., that convert that oil into gasoline, diesel, jet fuel and other products used by Minnesota consumers.
Those refineries are specifically configured to process the heavier crude from Canada’s oil sands region in Alberta and therefore couldn’t pivot quickly to take lighter oil from elsewhere.
Patrick De Haan, head of petroleum analysis for the website GasBuddy, predicts that gas prices in Minnesota and elsewhere in the Midwest will rise by 5 to 20 cents per gallon, but not immediately.
“Since crude oil must first be refined into fuel products, we’ll likely see a lag of a couple weeks before prices begin to climb,” De Haan said.
Electricity prices may also increase for some customers. Minnesota imported $700 million of hydroelectricity from Manitoba in 2023, according to the commerce department.
That hydropower makes up about 11 percent of the total electricity supply of the Duluth-based utility Minnesota Power, said spokesperson Amy Rutledge.
“While it is unclear at this time whether electricity will be subject to tariffs imposed by the United States or Canada, we are watching the situation closely to determine any potential impacts to our customers,” Rutledge said in a statement.
Because energy plays a significant role in all sectors of the economy, the state expects the price of consumer goods to also tick up, Arnold said.
“This is something that we can avoid,” Arnold added. “The federal government is putting Minnesotans in this position that is going to increase costs that will get passed on to you in a variety of ways, whether it's at the gas pump or the grocery store.”