It is hard to imagine a more effective means of slowing the nascent oil and gas drilling boom in the United States than to artificially increase the price for steel via import tariffs. Everywhere you look in the oil patches around the country, you see massive amounts of steel being employed.
Oil storage tanks? Made from steel. Dehydrator units and compressor stations and heater-treaters and amine units? Made from steel. Drilling rigs? Made from steel. All those pumpjacks moving up and down across the landscapes of the Permian Basin, the Eagle Ford Shale region and the Bakken Shale? Made from steel.
The Dakota Access, Keystone XL, Colonial, Transco and every other oil or natural gas pipeline constructed anywhere on the face of the earth? Made from steel. Those massive deepwater platforms being fabricated at Ingleside, Texas? Made almost entirely from steel. Those gigantic ships exporting crude oil out of Houston and Corpus Christi and LNG from Sabine Pass? Made from steel. Those oil refineries arrayed along refinery rows in New Orleans and Pittsburgh and Houston and Corpus? Made almost entirely of steel.
Just as natural gas and petroleum liquids are the fundamental feedstocks for an array of manufacturing processes in the U.S. and across the globe, steel is the fundamental, indispensable foundation of the oil and gas industry . No steel, no oil, no gas. It really is that simple.
So it should come as no surprise that, after President Donald Trump announced last Thursday that he would be imposing new tariffs on imports of steel and aluminum, industry representatives immediately began to voice concerns. I started to say “unexpectedly announced” in that previous sentence, but it also should not have surprised anyone that the President made that announcement. After all, he had promised on many occasions during his 2016 campaign that he would take this exact action, which he believes will create stronger steel and aluminum industries in the U.S.
As the oil and gas industry is well aware, this is a President who is very focused on keeping the promises he made throughout his campaign. Indeed, Trump spent a great deal of time and energy throughout 2017 following through on a broad array of actions he had promised to take that are quite positive for the industry: the rescission of a group of Obama-era regulations and executive orders the industry opposed; pulling the U.S. out of the Paris Climate Accords; issuing executive orders restarting the stalled Dakota Access and Keystone XL pipeline projects, along with one rescinding the Obama Clean Power Plan; speeding up energy-related permitting processes at EPA, The Department of Interior and the Commerce Department; Implementing a new 5-Year Plan that opens up vast new areas of federal waters to oil and gas leasing; and passing a tax bill that is hugely beneficial to the oil and gas industry.
The result of this rapid sea-change in energy policy has been to help stimulate investment in an industry that had spent 2015 and 2016 pulling in its sails to try to weather a perfect storm of low commodity prices and a flood of new regulations coming down from Washington, DC. It isn’t hard to understand that some in the industry thought this honeymoon might go on forever.