How Tariffs Are Impacting The U.S. Oil And Gas Industry

Core Insights - President Trump's tariff strategy has unevenly impacted the oil and gas sector, with crude oil and refined fuel imports exempt from tariffs, while upstream and midstream companies face rising costs from tariffs on materials like steel and aluminum [2][19][20] Equipment Costs and Supply Chains - Cost inflation on equipment and materials is a significant issue, with steel being the primary factor affecting various infrastructure components [4][19] - Tariffs are expected to add 2-5% to offshore project costs, leading to delays or renegotiations of capital plans [5] Impact of Tariffs on Crude Oil and Refined Products - Crude oil, LNG, NGLs, gasoline, and diesel are exempt from the new tariff structure, which helps maintain competitive supply chains for U.S. refineries [6][19] - A potential tariff on crude oil could severely disrupt refinery economics, particularly for Gulf Coast refineries that rely on imported heavy crudes [9][12] Economic Consequences of Tariffs - A 10-25% tariff on imported crude could lead to significant profitability losses for refineries optimized for foreign grades, resulting in higher fuel prices at the pump [10][14] - The U.S. could lose market share in refined product exports due to increased production costs from tariffs [15] Strategic Implications - The current tariff environment has already impacted U.S. oil and gas, and any future changes to crude oil tariff exemptions could have immediate and widespread consequences [18][20] - The industry is currently absorbing indirect costs from tariffs, which could shift dramatically if crude oil is added to the tariff schedule [19][20] Conclusion - Trump's tariff policy has created a dichotomy in the energy economy, preserving the supply chains for crude oil and refined products while increasing costs for the infrastructure necessary to support the industry [19][21]