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Trump's trade pledges have backfired, energy trade group says

A Texas oil and gas production organization said the president has made good on his campaign promises, but his policies are having consequences at home.

By
Daniel J. Graeber
Trump praised for fulfilling campaign promises, but a Texas oil and gas trade group said some of those promises have backfired. File Photo by Kodda/Shutterstock
Trump praised for fulfilling campaign promises, but a Texas oil and gas trade group said some of those promises have backfired. File Photo by Kodda/Shutterstock

Aug. 24 (UPI) -- U.S. President Trump is admired for fulfilling campaign promises, but some of those actions are harming his own ambitions on energy, a trade group said.

On the campaign trail, Trump promised to "use every tool under American and international law to end these (trade) abuses." Nearly two years into his term, he's made good on that pledge by targeting North American, European and Chinese trading partners with stiff tariffs.

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According to the Texas Independent Producers and Royalty Owners Association, using tariffs to cut into the U.S. trade deficit, a source of Trump's ire, has backfired.

"These tariffs on imported steel and aluminum have been described by many as effectively a tax against U.S.-based producers, large and small, adding significant cost on a per-well basis and a punitive tax of tens of millions of dollars to some critical infrastructure projects," Ed Longanecker, the president of TIPRO, wrote.

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The association estimated the price of steel use for pipeline infrastructure has increased by as much as 30 percent in some cases, limiting the ability of the domestic energy sector to keep pace with production trends.

The Permian shale basin in Texas is expected to account for the bulk of new global production over the next five years. The U.S. Energy Information Administration estimates Permian oil production will reach 3.4 million barrels per day in September, representing about 40 percent of total inland production.

"However, as the West Texas region continues to face output capacity challenges, the ability to move product will be dependent on having additional infrastructure in place, something that is threatened by the Trump administration's current tariffs on steel and aluminum," Longanecker wrote.

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The American Petroleum Institute, a vocal opponent of aluminum and steel tariffs, said the industry was facing additional pressures if trade measures were to target the oil and gas sector directly. Stephen Comstock, the group's director for tax policy, argued earlier this week there were concerns beyond steel pipe.

In remarks to the U.S. Trade Representative, Comstock said that trade disputes between the United States and China could put U.S. exports of liquefied natural gas in the cross hairs.

TIPRO estimates the United States could be the world leader in LNG exports next year.

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"With LNG demand expected to rise significantly over the next 12 to 18 months, the possibility of China implementing tariffs on U.S. natural gas exports has also caused concern about the construction of several facilities in the United States for LNG exports," Longanecker wrote.

The U.S. Trade Representative said that so far it's apparent that existing U.S. measures have not been enough to convince China to "change its acts, policies, and practices."

Section 232 tariffs were imposed on national security grounds. The Trump administration hit foreign aluminum imports with a 10 percent duty and steel imports with a 25 percent duty.

From the campaign trail, Trump vowed to capitalize on the country's oil and gas potential.

"This will create vast profits for our workers and begin reducing our deficit," he said in June 2016.

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