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Michael Yon, an Army Ranger and war correspondent, tends to appear worldwide in hot spots, and today is no exception. Several weeks ago, I was invited to go to Panama to interview him and others, and I could not work the travel into my schedule. This would have been our second interview, and I am hoping we can get that rescheduled. That said, it appears that Pete Hegseth and lots of Marines are heading or are there this week. And we have an “air show” planned for some F18s. This could get interesting.
This is being brought to a head as China stopped selling the two ports on each end of the canal from the Hong Kong-owned company to BlackRock. If China can stop the sale of the ports, it can stop shipping through the canal, and that will not set well for United States trade.
Let’s review how important the Panama Canal is to the United States.
The amount of oil and liquefied natural gas (LNG) that passes through the Panama Canal varies depending on global trade patterns, environmental conditions, and canal capacity. Here’s a breakdown based on available data up to April 7, 2025:
Oil (Crude Oil and Petroleum Products)
- Crude Oil: The Panama Canal plays a limited role in crude oil transport due to size restrictions. Even with the 2016 expansion, Very Large Crude Carriers (VLCCs) and Ultra-Large Crude Carriers (ULCCs), which carry the majority of global crude oil (1.9–2.2 million barrels and more, respectively), are too large to transit fully laden. Smaller Panamax tankers (400,000–550,000 barrels) and Neopanamax tankers (400,000–680,000 barrels) can pass, but crude oil traffic remains relatively small. In 2015, before the expansion, southbound crude oil was about 3.0 million long tons (roughly 21–24 million barrels annually, assuming a long ton of crude approximates 7–8 barrels), and northbound was 2.6 million long tons (18–21 million barrels). Post-expansion, crude oil transit has not significantly increased due to these size constraints and alternative routes like the Suez Canal or around the Cape of Good Hope being more economical for larger vessels.
- Petroleum Products: Refined products like gasoline, diesel, and naphtha are more prominent. In 2018, southbound flows included 266,000 barrels per day (b/d) of distillate (e.g., diesel) and 230,000 b/d of motor gasoline, totaling approximately 496,000 b/d of refined products. Assuming a full year, this equates to about 181 million barrels annually. In 2023, Gulf Coast gasoline exports through the canal dropped to 203,000 b/d (around 74 million barrels annually), a 40% decrease from the previous year, due to drought-related transit restrictions.
Liquefied Natural Gas (LNG)
- Volume: The Panama Canal has become increasingly important for LNG since the 2016 expansion, which allowed 90% of the world’s LNG tankers (up to 3.9 billion cubic feet, or Bcf, capacity) to transit. In 2018, LNG transits reached 340 vessels, carrying approximately 387,000 b/d of hydrocarbon gas liquids (HGLs, including LNG and LPG), with LNG being a subset. Assuming LNG constituted a third to half of this (given LPG dominance), it might approximate 130,000–190,000 b/d. Converted to cubic feet (1 barrel of LNG ≈ 0.12 MMcf), this is roughly 5.7–8.3 Bcf/day or 2.1–3 trillion cubic feet (Tcf) annually. However, by 2023, LNG traffic dropped 65% from its peak due to drought restrictions and a U.S. shift to European markets post-Russia-Ukraine conflict, reducing transits to about 4.9% of Neopanamax crossings in April 2024 (suggesting 0.5–1 Bcf/day or 0.18–0.37 Tcf annually).
- Recent Trends: In January 2024, transit slots increased, but LNG volumes remained lower than pre-drought levels. The canal aims to recover this traffic with a new reservation system starting in 2025, potentially boosting LNG to 1–2 vessels per day (0.5–1 Bcf/day).
Key Influences
- Drought Impact: In 2023, low water levels at Gatun Lake reduced daily transits from 36 to as low as 20–24, significantly cutting oil and LNG flows. By mid-2024, transits recovered to 30–32 vessels/day, still below the 36–40 pre-drought capacity.
- Market Shifts: U.S. LNG exports to Asia (via the canal) decreased as Europe’s demand surged, while petroleum product destinations shifted (e.g., Chile reduced U.S. imports).
Estimated Totals (as of Recent Data)
- Oil: Approximately 74–100 million barrels of petroleum products annually in 2023, with crude oil adding a smaller fraction (perhaps 20–30 million barrels), totaling 94–130 million barrels/year.
- LNG: Around 0.18–0.37 Tcf annually in 2023–2024, down from a potential 2–3 Tcf at peak capacity.
These figures are dynamic and subject to change with weather, geopolitical shifts, and canal policies. For the most current data beyond April 7, 2025, real-time shipping records or Panama Canal Authority updates would be needed.
Several new upgrades for LPG pipelines have just been announced, as well as an increase in the lake in the center to survive droughts better.
Jimmy Carter should have never given away the canal, and China took it over. We have had weak presidents who have not put America First, and we see a real president stand up for the American people for the first time. With China crashing financially this morning, we will see some interesting responses. Over 50 countries have contacted the White House to negotiate Trump’s Tariffs. We will see how China responds to the US “Air Show” and all of the Marines hanging out. One thing is sure.
We have an American First President, for which I voted.
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