April 2018, Vol.245, No.4
Editor's Notebook
The Steel Backlash
President Donald Trump’s plan to impose a 25% tariff on U.S. imports of steel and 10% on aluminum has been met with harsh criticism worldwide. European Commission President Jean-Claude Juncker has threatened to counter with tariffs on U.S. products.
The gas and oil industry has also been critical. Jack Girard, head of the American Petroleum Institute said that “the U.S. oil and natural gas industry in particular relies on specialty steel for many of its projects that most U.S. steel makers don’t supply.”
Plains All American CEO Greg Armstrong parlayed that sentiment saying, “…Certain types and sizes of steel pipe, as well as valves and other equipment, were only available outside the United States. We need some flexibility to be able to move forward.”
The planned change in policy has been enough of a concern to prompt a letter to the U.S. president from the heads of America’s most prominent gas and oil associations.
Dear President Trump:
National security requires pipelines to deliver the energy America needs, and pipelines require specialty steel products not always available in sufficient quantities and specifications from domestic manufacturers. Pipeline projects create construction jobs, bring affordable energy to millions of American consumers, and support American energy production. These projects may not go forward if a steel tariff makes pipeline steel unavailable on a reasonable timeline and at a competitive price.
Just like in real estate, promising pipeline projects have not gone forward because the costs were too high, or the needed building materials not sufficiently available. We fear that broad tariffs on the specialty steels used by our industry would cause future projects to be delayed or canceled, thus threatening America’s energy dominance and risking higher prices for families at the gas pump, natural gas ratepayers, and energy-consuming employers nationwide.
Pipelines put Americans to work. Already, 75 percent of spending on a pipeline project ends up in the hands of American workers and businesses. A typical 300-mile pipeline project would generate approximately $1 billion in U.S. worker payroll and spending. Tariffs that include pipeline steel and lead to the cancellation of a pipeline project will deprive American workers and vendors of that $1 billion. Pipeline projects are also vital to national security. Due to insufficient pipeline capacity, certain areas of our country continue to rely on imported fuels to meet basic energy needs. As you weigh important concerns about broad steel market issues, we urge caution because American energy jobs depend on specialty pipeline steel products.
We understand and respect your concern for domestic steel manufacturers. We, too, hope to see domestic steel and pipe manufacturers always able to supply products on the terms needed for the American pipeline expansion you have so well promoted. Pipeline-grade steel is a high-cost specialty product in a cyclical niche market that some domestic manufacturers have moved away from.
In fact, for certain pipeline steel products, there is zero domestic availability today. Applying steel tariffs to transmission pipelines, oil country tubular goods, and other parts of oil and gas production and transportation cannot be the best way to help.
While we discourage you from imposing steel tariffs, we urge you at least to allow exemptions when steel products needed for energy production, processing, refining, transportation, and distribution are not sufficiently available in domestic markets. Doing no less will threaten American energy workers and consumers.
Sincerely,
Andrew J. Black, AOPL
Donald F. Santa, INGAA
Thure Cannon, TPA
Mark Sutton, GPA Midstream Association
Dena Wiggins, NGSA
Charlie Riedl, Center for LNG
Toby Mack, EEIA
V. Bruce Thompson, AEPC
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