Plains All American Pipeline, LP (NYSE: PAA) said Friday that it will charge users of the new pipeline to offset the cost of paying tariffs on imported steel imposed by President Donald Trump's administration last year. Analysts and traders call PAA the first energy pipeline operator in the United States to “call a spade a spade.”
PAA is a public limited company that owns and operates mid-range energy infrastructure and provides logistics services for the transportation of oil and liquefied natural gas. PAA owns an extensive network of pipeline transport, terminalization, storage and collection of assets in key basins for oil and natural gas production at major market hubs in the United States and Canada.
The company will begin charging shippers a fee of 5 cents a barrel on its Cactus II pipeline in April next year to “offset higher construction costs following government regulation and tariffs,” according to a statement from the FEC.
Last year, the PAA calculated that a 25 percent tariff on imported steel would add $ 40 million to its $ 1.1 billion pipeline, which runs 550 miles from the Permian Basin of West Texas and New Mexico. the main shale field of the United States, to the coast of the US Gulf of Mexico.
Two other new American pipelines could also raise prices, according to US analysts. They pointed to the Kinder Morgan Inc Gulf Coast Express pipeline and the EPIC Midstream pipeline, which were built after the introduction of 25 percent steel tariffs.
Trump's metal tariffs were introduced last year to help the domestic steel industry as it competes with imports from overseas.
This is not the first time the US oil industry has been negatively impacted by steel tariffs. Last year, ConocoPhillips said prices for steel used in pipes, fittings and other equipment have risen 26 percent since the beginning of 2018.
The PAA has previously asked the federal government for an import duty exemption for steel used in the construction of the Cactus II, citing that they will add $ 40 million to the project estimate. However, the request was rejected.
