The global oil industry is warning U.S. President Trump that his newly proposed steel tariffs could threaten America’s energy boom and have resounding affects throughout the oil and gas industry around the world. These tariffs will increase costs on the foreign steel that oil companies rely on for everything from drilling and production to pipelines and refineries and it could make the U.S. less competitive against OPEC.
Industry insiders are getting nervous that Trump’s efforts to revive the beleaguered steel industry with a 25% tariff on imports could have a negative effect on their supply chains and workforce. With U.S. oil production reaching an all-time high of just over 10 million barrels a day last November, marking an incredible rebound from the crash of two years ago, these new tariffs could undo everything the industry has worked hard to accomplish.
Many believe that with the economy in such a good place and the oil and gas industry growing, there is no need for these tariffs and the resulting trade war that would follow. Once the US imposes tariffs, other countries around the world will follow making it even more difficult for smaller countries still struggling to overcome their own recessions, to succeed.
The Direct Effect on the Oil and Gas Industry
Steel tariffs could also cause the layoff of thousands of oil and gas industry workers around the world at major oil companies, including ExxonMobil, Chevron and Hess. Much of the steel that would be affected is used by the industry to manufacture pressure control equipment, valves, wellheads and other important apparatus. The API said the US oil and natural gas industry relies on global steel imports for the “majority” of its operations. That includes drilling, production facilities, pipelines, liquefied natural gas terminals, refineries and petrochemical plants.
Whether or not the tariffs will be imposed by the U.S. remains to be seen as politicians and industry executives are working to prevent any new tariffs and help the U.S., China and the E.U. avoid a trade war that could affect everything from steel, oil and gas, to Levi’s, bourbon whiskey and shipping. The big factor here is the people that work in these industries and how their jobs will be protected as many oil and gas companies are already looking for ways to avoid layoffs and keep their employees working.
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