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Oil and gas industry warns of impacts of steel tariffs

Posted at 4:03 PM, Jul 27, 2018
and last updated 2018-07-27 20:55:35-04

DENVER -- Only two things stand in the way of Colorado's shale boom: A proposed ballot measure to limit fracking and President Trump's tariff on imported steel.

"It's a real challenge for the oil and gas industry when you start imposing tariffs on things like steel," President and CEO of the American Petroleum Institute, Jack Gerard, said during an annual state of Colorado energy luncheon Thursday.

Gerard said President Trump's tariff is putting America's energy renaissance in limbo and could have significant impacts on the energy industry.

Oil and gas companies use highly specialized steel pipes to drill wells and carry crude oil and natural gas. That oil is used to fuel cars and the gas is used to heat homes.

The problem is most of the steel line pipes aren't made in the United States, and must be imported from countries like Germany, which are now being slapped with a 25-percent tariff.

"You're raising the cost of production, hurting consumers, creating uncertainty within the oil and gas base, which would encourage dollars to be invested elsewhere," Gerard explained. "We don't want that. We want those dollars here in the United States. We want the opportunity to invest right here in Colorado."

According to a recent report from ICF, a Virginia-based global consulting firm, 77 percent of the highly-specialized steel used in pipelines is imported.

The same report estimated tacking on a 25-percent tariff will increase the market value of imported line pipes from between one to two billion dollars. It's an additional cost that will eventually be passed on to consumers in the form of higher gas and electricity prices.

"It has very significant repercussions to the oil and gas industry," Gerard said. "There's specific, direct, adverse impacts to potential projects in this country that has us very concerned."

Gerard also said he hopes the trade deal reached earlier this week between President Trump and the European Commission president is a sign of positive things to come.