Pay Up, Oil Traders. Trump’s Steel Tariffs Now Affect You Too
(Bloomberg) -- Oil traders will be paying for President Donald Trump's tariffs on steel.
On Friday, Plains All American Pipeline LP issued tariff rates to ship on its 670,000 barrel-a-day Cactus II pipeline moving oil from the prolific Permian Basin to Corpus Christi, Texas.
While the tariff detailed the difference in rates between those with long-term volume commitments and those looking to ship on a monthly, spot basis, it also included a small footnote that outlined an additional peculiar surcharge.
This additional surcharge, at 5 cents a barrel, will be effective April 1 of next year and is in connection to “increased construction costs as a result of governmental regulation and tariffs.” The filing with the Federal Energy Regulatory Commission adds that this fee will be assessed until such capital expenditures have been recovered by the owner.
Trump's tariffs on metal were put into place last year to aid the domestic steel industry as it competes with imports from abroad.
It's not the first time the oil industry has been impacted by steel tariffs. Last year, ConocoPhillips said that prices for steel used in pipes, valve fittings and other equipment rose by 26% since the start of 2018.
Plains All American had earlier requested the federal government for relief from higher ferrous prices for Cactus II, citing that the duties will add $40 million to the cost of its Permian pipeline. The request was denied, however.
To contact the reporter on this story: Catherine Ngai in New York at cngai16@bloomberg.net
To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net, Joe Carroll
©2019 Bloomberg L.P.
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