All roads lead to Cushing*

*Probably the first time in the history of Oklahoma that anyone has attempted to compare Cushing to Rome.

Some random quotes and a few stray thoughts on the stupidest trade war imaginable.

First off, when it comes to any story that is even partially about oil, the essential context is that we are now operating with little to no reserves. (Credit to CNN for their early and in-depth coverage of a story that has not been getting nearly enough attention.)

For a quick Econ 101 review—which, given my lack of knowledge, is about as far as I should go—when demand exceeds supply in a textbook market, we expect prices to go up until either supply increases or demand decreases so that the two match up again. This has happened particularly in places like China, but not to the degree you'd expect, largely due to countries and companies dipping into their oil reserves to make up the difference.

There's nothing wrong with this practice. It smooths out price swings, makes it far more difficult to manipulate the market, and makes budgeting more predictable both for consumers and businesses. As long as you don't treat this as a long-term solution and you keep reasonable reserves on hand, it is sound policy.

Unfortunately...

Oil reserves have only gotten lower. We are approaching the point where we have no buffer. That means that, in the event of a major supply shock, prices will have to increase enough to bring demand down. That is bad enough when you talk about gasoline, where there is a reasonable elasticity of demand. When the subject turns to diesel or heating oil, reducing consumption becomes really painful.

Outside of the Strait of Hormuz, the Red Sea, the Suez Canal, and other choke points recently in the news, we have possible attacks on oil infrastructure in Russia, cyberattacks, natural disasters, industrial accidents, and spectacularly ill-considered trade talks.

From Krugman:

 Another example: The U.S. is a net exporter of crude oil, but imports millions of barrels a day from Canada, mainly into the upper Midwest. That region could in principle get its oil from Texas instead, but that’s an immediate non-starter: the pipeline infrastructure isn’t there and refineries need heavy Canadian crude rather than lighter Permian basin oil.

Yet another example: U.S. imports of electricity from Canadian hydropower are small compared with overall consumption, but are often a significant part of total supply in New York and New England.

There is, of course, a huge chasm between the drastic steps a country could take and what it is likely to take, particularly when those drastic steps would be as or more costly to the country in question. There are plenty of examples of leaders who were eager to take a hard line only to see their support evaporate when their voters had to start bearing the cost.

That does not at all appear to be the case in Canada.

From Josh Marshall:

This almost perfectly mirrors Canada’s current position vis a vis the U.S. The U.S. economy dwarfs Canada’s. The impact of an all-out trade war on Canada is vastly greater than the impact on the U.S. But Canada’s whole society and politics are consumed with this issue. That is even more the case when it emerged over the weekend that Trump is not only demanding unequal trade terms but attacking Canadian sovereignty in the form of demanding an end to domestic protections for the French language and a veto over Canadian trade deals with other countries. If anything, Prime Minister Mark Carney is trying to keep up with popular anger at the U.S. rather than getting the Canadian public to back up his hard line.

 

Almost immediately after Marshall wrote this, Rob Ford, the right-wing premier of Ontario and, with his late brother Doug, one of the leaders of what you might call the MAGA of the North and formerly a strong supporter of Donald Trump, released the following statement.

Premier Doug Ford had harsh words for U.S. President Donald Trump who vowed on Monday to increase tariffs to 50 per cent on all Canadian cars, trucks, automotive parts, and steel on New Year’s Day.

“He can kiss my ass as far as I’m concerned,” Ford told Newstalk 580 CFRA host Bill Carroll on Monday morning. “We are going to go at him full steam.”

Ford said he is considering putting an export tariff on electricity to make the U.S. “feel the pain.”

...

 “I am not going to take any advice off a guy that is the king of bankruptcies and he is actually tariffing his own people, taxing his own people,” Ford said. “I am going to be reaching out to every single governor, every single senator and when it comes to the (U.S.) midterms I have a message to the Americans: don’t vote in a person that is going to kill your jobs.”

Trump losing the Canadian far right is kind of a big deal. This quote also brings up another key factor that hasn't gotten the coverage it deserves. Like the Iranians, Canadians also keep up with American electoral politics, particularly in states like Michigan and Wisconsin.

At least some of the anger from the north is due to the performative dickishness of the administration.

 

 

JD Vance: "Canada is a state -- sorry. Freudian slip."

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— Aaron Rupar (@atrupar.com) August 24, 2026 at 9:40 AM

 

As always, the key concept for understanding the policies of this White House is thinking of Trump as an elementary school bully and his staff as toadies focused on immediate gratification and unwilling, possibly incapable, of thinking things through. The immediate reaction to any humiliation is to try to find someone smaller and weaker to publicly humiliate.

Canada is likely to prove a horrible choice in this respect, but by now we all know that making good choices is not a hallmark of this president.