Trump's Tariffs Raising Costs For The U.S. Oil And Gas Industry - And Americans

August 31, 2018

"We're now seeing the impacts of the steel tariffs flow through and they're affecting, of course, tubulars and other steel products that we use. We can see steel easily compared to last year would be 20% to 25% over last year's cost for the same products,” Timothy Dove, CEO, Pioneer Natural Resources, leading producer in the Permian basin, largest oil field and the second largest natural gas field in the U.S.

We knew it would happen. We were warned about it from the industry itself. The Trump administration's trade war has been a major threat to oil prices, and its 25% tariff on imported steel, in particular, has started to increase costs for U.S. oil and gas producers. Unfortunately, it’s been commonly reported this earnings season, rising costs for imported specialty steel products eating into profits. The problem, of course, has been that many of these items are necessarily imported, as they are not even made here in the U.S.

The majority of drill pipe is imported.  To illustrate, ConocoPhillips reports that "prices for steel used in pipes, valve fittings and other equipment have risen 26 percent in the U.S. since the start of the year." The company spends $300 million a year on equipment affected by the tariffs, and the tariffs will "add $40 million to the cost of the new pipeline it's building in the Permian basin in West Texas."

One problem for us using such protectionism ...

Read entire article at Forbes.com.

 

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