The ambitious energy plan of the incoming Trump administration, including increasing oil production by 3 million barrels per day, imposing a potential 25% tariff on Canadian oil and gas imports, and accelerating liquefied natural gas (LNG) export approvals, may reshape the US energy market, but there are winners and losers.

Goldman Sachs analyzed in its report to clients the significant changes that could occur in the US energy market after Trump's re-election. Let's analyze who will bear the cost of this constantly changing energy landscape.

Can the United States really increase oil production by 3 million barrels per day?

Goldman Sachs stated that Trump's ambitious vision of increasing US energy production by 3 million barrels per day between 2025 and 2028 is not entirely unrealistic.

CFA analyst Callum Bruce stated that if natural gas and liquefied natural gas (NGL) are included, this goal can be achieved by 2028.

Between 2018 and 2023, energy production in the United States is growing at a rate of 1.8 million barrels per day per year, which is more than twice the 0.75 million barrels per day required to achieve the 3 million barrels per day target. Goldman Sachs predicts that US oil production will increase by 2 million barrels per day from 2025 to 2026, achieving two-thirds of Trump's target in the first two years of his possible second term.

Bruce said, "The growing demand for liquefied natural gas, capital discipline, and energy prices are the key driving factors behind this growth. However, the short-term impact of policy changes on production is expected to be limited.

What does a 25% tariff on Canadian oil mean?

Another notable idea of the government - imposing a 25% tariff on Canadian oil imports - has caused dissatisfaction among some people.

Canada is the largest crude oil supplier to the United States, exporting 4 million barrels of crude oil per day last year, accounting for approximately 25% of the total refining investment in the United States.

Most of the oil (2.8 million barrels per day) is transported to the Midwest, where refineries heavily rely on Canadian crude oil.

Goldman Sachs' analysis shows that imposing a 25% tariff on Canadian imported oil will hit American consumers in the short term by raising gasoline prices. However, over time, this burden may change.

At a later stage, Canadian producers may be the first to bear the brunt as they offer significant discounts to keep oil flowing southward. The current price of Western Canada Select Crude Oil (WCS) is slightly below $60 per barrel, and in order to compete with American alternatives, it may face a discount of $15 per barrel due to tariffs.

Currently, WCS's trading price is slightly below $60 per barrel. A 25% tariff will increase the cost per barrel by approximately $15, forcing Canadian producers to lower prices and incentivizing American refiners to seek cheaper alternatives.

Canadian natural gas tariffs: Who pays?

If a 25% tariff is imposed on Canadian natural gas, the situation will be slightly different.

Canada's natural gas exports to the United States average 5-6 billion cubic feet per day (Bcf/d), accounting for 5% of the US supply. Imposing a 25% tariff on these imported products may squeeze Canadian producers in the short term,

According to Goldman Sachs, based on the current price difference, a 25% tariff could reduce the daily import volume of the United States by approximately 200 million cubic feet.

Goldman Sachs predicts that in the short term, Canadian producers will bear the majority of tariff burden due to oversupply and low prices. But starting from 2026, driven by an increase in liquefied natural gas exports, the natural gas balance in the United States will become even tighter, which may shift more costs onto American consumers.

Bruce said, 'Canadian natural gas producers may bear most of the burden until the United States begins to tighten its balance of payments from 2026.'.

Liquefied natural gas exports: Accelerating approval speed will not change the current situation

The report is skeptical about whether the accelerated approval of liquefied natural gas export projects by the US Department of Energy (DoE) will have a substantial impact on the global or domestic natural gas balance before 2027.

Bruce said, "The approval from the US Department of Energy is necessary, but not enough to drive new liquefied natural gas projects. Long term capacity contracts and time-consuming construction processes remain bigger obstacles

That is to say, by 2030, the export volume of liquefied natural gas from the United States is expected to more than double, reaching 25 billion cubic feet per day, and increasing the global market share of natural gas exports from 22% to 31%.

Conclusion: Winners and losers

Goldman Sachs' analysis provides a clear conclusion: while an energy boom may increase US production, tariffs and policy changes may affect the market in a way that is not always predictable.

The energy policy proposed by Trump may reshape the North American energy market, but the impact varies among participants:

American consumers: If Canada imposes tariffs, they may face higher gasoline prices in the short term.

Canadian producers: facing pressure from falling oil and gas prices.

American producers: positioned to leverage higher domestic production targets and increasing liquefied natural gas exports.

Midwest Refiners: Will face profit margin pressure, but may offset costs by negotiating greater discounts on Canadian crude oil.