The recently announced tariffs by the Trump administration are likely to have an adverse effect on most industries. We look at how the oil and gas industry is likely to be impacted, with the offshore activities at the Gulf of Mexico serving as a vivid example.
The specific tariffs that are impacting oil and gas firms in the Gulf of Mexico include the 25% levy imposed on nearly every import from Mexico and Canada. Energy products from Canada were slapped with a 10% levy and imports from China also had a 10% levy imposed on them. Additionally, tariffs on aluminum and steel were also expanded. All these shocks will be felt by players in the Gulf of Mexico oil and gas industry.
The oil and gas industry heavily utilizes steel for its tubular components, such as tubing, casings and risers. Subsea systems, platforms and other such needed equipment by offshore oil and gas firms also require large amounts of steel. Reports show that once the expanded tariffs on aluminum and steel were announced as taking effect on February 10 this year, steel pipes saw a 15-25% price hike.
Another challenge likely to be faced has to do with existing supply chains being disrupted. Approximately 16% of the tubular goods used by the oil and gas industry in America come from Canada. Mexico also supplies significant amounts of steel and other equipment needed by offshore operators. These integrated supply chains have been operating smoothly under the auspices of the NAFTA mechanism and other such trade agreements.
The new tariffs are upending these longstanding relationships and operators will have to dig deeper into their pockets to purchase the inputs they need. Another consequence is the prospect of lengthy delays as they turn to domestic sources that may not have the required production capacity to avail the needed inputs within the required timelines.
To compound the cost pressures that offshore oil and gas operators now face is the 10% levy tagged onto imports from China. China has for long been the go-to source for valves, subsea hardware, fittings and other equipment due to the Asian nation’s low costs of production. That tariff is going to increase input costs for Gulf of Mexico oil and gas firms, and their margins will be squeezed further.
While Trump sings “Drill, baby, drill,” American oil and gas firms with offshore operations aren’t currently feeling the love. It would be interesting to hear what firms like GEMXX Corp. (OTC: GEMZ) conducting oil and gas exploration activities in other countries in the Americas have to say about how they are being impacted by this escalating trade war.
NOTE TO INVESTORS: The latest news and updates relating to GEMXX Corp. (OTC: GEMZ) are available in the company’s newsroom at https://ibn.fm/GEMZ
About Rocks & Stocks
Rocks & Stocks (“R&S”) is a specialized communications platform delivering deep insights into the mining industry. It is one of 70+ brands within the Dynamic Brand Portfolio @ IBN that delivers: (1) access to a vast network of wire solutions via InvestorWire to efficiently and effectively reach a myriad of target markets, demographics and diverse industries; (2) article and editorial syndication to 5,000+ outlets; (3) enhanced press release enhancement to ensure maximum impact; (4) social media distribution via IBN to millions of social media followers; and (5) a full array of tailored corporate communications solutions. With broad reach and a seasoned team of contributing journalists and writers, R&S is uniquely positioned to best serve private and public companies that want to reach a wide audience of investors, influencers, consumers, journalists and the general public. By cutting through the overload of information in today’s market, R&S brings its clients unparalleled recognition and brand awareness.
R&S is where breaking news, insightful content and actionable information converge.
To receive SMS alerts from Rocks & Stocks, text “Rocks” to 888-902-4192 (U.S. Mobile Phones Only)
For more information, please visit https://RocksAndStocks.news
Please see full terms of use and disclaimers on the Rocks & Stocks website applicable to all content provided by R&S, wherever published or re-published: https://RocksAndStocks.news/Disclaimer
Rocks & Stocks
Los Angeles, CA
RocksAndStocks.news
310.299.1717 Office
[email protected]
Rocks & Stocks is powered by IBN
