Advertisements
Open post

Trump Giveth, and Trump Taketh Away

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.

 

Read The Rest Here

Advertisements
Open post

How to Think of Trump’s Tariff Proposal

The Evening Campaign Update

(Because The Campaign Never Ends)

 

So, President Donald Trump spent all day Friday getting hammered by the fake news media, Democrats and many Republicans in congress, and leaders of other countries all over the world for his announcement Thursday afternoon that he plans to implement tariffs on imports of steel and aluminum next week.

If that reaction mix sounds familiar to you, it should.  It’s exactly the same reaction from a very similar mix of players he received last summer when he announced he was pulling the United States from the Paris Climate Accords.  Coincidence?  Not really, no.

Think about it:  What did President Trump say when he cancelled Barack Obama’s probably-illegal executive agreement that committed an entire country of 330 million people to the Paris Accords with no review or vote from congress?  He identified the Paris construct as nothing more than a wealth redistribution scheme that would suck trillions of dollars out of the U.S. economy and redistribute that wealth among the other nations who were signatories to the agreement.

In saying that, the President was 100% correct.  The Paris Accords have literally nothing to do with “saving the climate” by convincing countries to reduce their air emissions.  If it did, then why have none of the other nations who remain in the Accords met their emissions commitments under the deal?  That should give you a clue.

President Trump looks at the import/export equation on steel and aluminum in exactly the same terms.  He sees a situation in which a country like China gets to export its steel into the U.S. while paying no tariff at all, while at the same time levying a 50% tariff on U.S. steel coming into China, and sees that as just another scheme to redistribute U.S. wealth and jobs to another nation.  It’s the same concept.

The hilarious part of all of this is that so many members of congress and in the news media were shocked at the President’s Thursday announcement, just as almost all of the same people were shocked last summer about the President’s Paris decision.  Good lord, he promised on at least 100 occasions during the 2016 campaign to place tariffs on imports of all manner of goods, including steel and aluminum, if he were to win the election.

Since becoming President, Mr. Trump has been laser-focused on keeping the myriad promises he made during that campaign.  As many have detailed, he has already, just 14 months into his term in office, kept the great majority of those promises.  So why is anyone surprised in any way, shape or form that he is now going about keeping his promise to America’s steel and aluminum industries?  It would have actually been a real surprise had he not chosen to do so at some point soon.

I personally have mixed feelings on the tariff issue, and am not endorsing these tariffs just as I do not endorse the President’s recent implementation of tariffs on imports of solar panels.  But to Mr. Trump’s credit, he was completely open and honest about his plans to implement such tariffs during the campaign, and it is also to his personal credit that he remains committed to keeping his promises, whether I or anyone else agrees with him on the issue or not.

So, tariffs and Paris – there’s your analogy.  It even sort of rhymes.

[Addendum]  The other thing we must remember is that, with Donald Trump, literally EVERTHING is a negotiation.  This is not the end game in his mind – this is the start of a negotiation with China mainly, but with other countries as well. His goal is not to start a trade war, it is to change behaviors. He also very likely has in mind using these tariffs as an item to trade in exchange for something else down the road.

The setting of these tariffs is not the ending point for Mr. Trump, it is the starting point.

That is all.

Follow me on Twitter at @GDBlackmon

Today’s news moves at a faster pace than ever. Whatfinger.com is my go-to source for keeping up with all the latest events in real time.

Posts navigation

1 2
Scroll to top
%d bloggers like this: