Major oil pipeline companies are worried that the high cost of importing steel due to the Trump administration’s new tariffs will increase oil prices, among other problems.
Companies have specific steel requirements and seek manufacturers who can meet those requirements within a timeline constraint, all while ensuring the required volume is met.
Most companies are arguing that without the specific capabilities of select steel manufacturers in countries like Turkey, who has a manufacturer for Kinder Morgan, it would be increasingly difficult to maintain production volume without sacrificing current production schedules.
Analysts warn a bottleneck of crude could force some producers to shut down production.
A Japanese steel provider helps oil and gas producer Hess guarantee corrosion resistance in deepwater operations, which is something Hess would not be able to do if it had to find a different provider.
Benchmark steel oil prices have increased 50 percent since last year, and with 77 percent of steel used in pipelines being imported, over 500 petitions have been submitted for exclusions and exemptions from steel-import tariffs.
Initial decisions are expected to be made this month.