August 3, 2018
Pipeline companies operating in Texas are spending billions on Permian Basin infrastructure to keep the oil and natural gas moving to domestic and international customers. The problem is that President Donald Trump’s 25% tariffs on much of the world’s steel could increase the cost of those projects by millions.
Plains All American Pipeline of Houston recently used its $1.1-billion, 550-mile Cactus II pipeline in the Permian Basin as an example. In written testimony to Congress, COO Willie Chiang pointed out that U.S. companies aren’t manufacturing steel to Cactus II’s specifications, leading Plains All American to contract with a Greek steel mill. Chiang noted that the tariff is acting as a “punitive tax of approximately $40 million, yet the U.S. steel industry will receive no benefit.”
No major Permian Basin pipeline projects have been cancelled in face of the tariffs. Still, lack of capacity makes it harder for oil and natural gas to be piped out of the region.
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