Never before in recent times has there been such a love-in between the energy industry and a President. Reagan was a energy industry favourite, so was oil-man George W. Bush, but Donald Trump digs coal, and oil and gas in a way that has surpassed his oil-friendly predecessors.
Here is a President who even rips up National Parks for his oil and coal buddies. Just last week, the New York Times reported that, internal emails reveal that oil “was central in the decision to shrink the Bears Ears Monument.” One email from Senator Orrin Hatch, Republican of Utah, reveals the new boundary being proposed by the Trump Administration would “resolve all known mineral conflicts.” i.e Open up the lands to drilling.
But just when the oil and gas industry thought that their Commander-in-chief could do no wrong to promote a joint oil and gas bonanza as the planet cooks, the President has tripped over his laces and fallen flat on his face. His oil buddies are indignant.
Last Thursday’s announcement by Trump that he was slapping a 25 per cent increase in tariffs on imported steel and 10 per cent on imported aluminium from this week caught everyone by surprise. The Guardian reported how: “The move caught the state department, treasury and Pentagon unawares, wiped hundreds of points off the stock market and rattled America’s closest allies.”
CNN added: “There was not much sign, for instance, that the White House had gamed out the reactions of trading partners to the new tariffs and the risk of a trade war and damage to key alliances that they could provoke.”
Stock markets “plummeted” in response. Trump’s tariff imposition was apparently “off the cuff”. What the move wasn’t is well thought through. But the following morning Trump justified his decision by tweeting, in part: “trade wars are good, and easy to win.”
Trade wars may be good in the chaotic mind of this President, but he has infuriated his buddies in the oil and gas industry. Because the one thing he has certainly done is hurt the domestic oil and gas sector, which is totally reliant on iron and steel for its infrastructure.
Amongst the falls in stocks after the announcement were some in the oil sector, whose bosses “slammed” the move, urging Trump to reconsider. Andy Black, CEO of the Association of Oil Pipe Lines (AOPL) was quoted by Reuters last week as saying: “We are urging the administration to avoid killing U.S. jobs through a steel tariff that impacts pipelines.”
Forbes noted yesterday that the tariffs are a “big problem for all Americans because it’s a big problem for our booming oil and gas industry … the tariff is opposite the administration’s own stated goal of ‘energy dominance’”.
The article adds: “The tariff could easily have unintended consequences and jeopardize the viability of our export projects for oil and liquefied natural gas (LNG). The last thing we want Mr. President is any sort of trade war with nations that want to buy our oil and gas.”
Bloomberg adds that the move will “inevitably drive up costs for the nation’s oil and gas producers. And that could be bad news for the resurgent shale industry.”
Indeed one commentator on the OilPrice.com believes the tariff imposition could even lead to a “massive drop in oil” demand as well.
And that is the one thing this oil-loving President did not want.