• 3 minutes Biden Seeks $2 Trillion Clean Energy And Infrastructure Spending Boost
  • 5 minutes While U.S. Pipelines Are Under Siege, China Streamlines Its Oil and Gas Network
  • 8 minutes Gazprom fails to exempt Nord Stream-2 from EU market rules
  • 9 hours Trumpist lies about coronavirus too bad for Facebook - BANNED!
  • 33 mins The World is Facing a Solar Panel Waste Problem
  • 9 hours Rational analysis of CV19 from Harvard Medical School
  • 9 hours Biden admits he has been tested for Cognitive Decline several times. Didn't show any proof of test results.
  • 4 hours The Core Issue Of US Chaos..Finally disclosed
  • 10 hours Trump Suggests Delaying Election Amid Fraud Claims
  • 8 hours Open letter from Politico about US-russian relations
  • 9 hours China's impending economic meltdown
  • 9 hours Why Oil could hit $100
  • 9 hours Brent above $45. Holding breath for $50??
  • 4 hours Pompeo upsets China; oil & gas prices to fall
  • 7 hours Russia Trying To Steal COVID-19 Vaccine Data, Say UK, U.S. and Canada
  • 1 day End Game For Oil? OPEC Prepares For An Age Of Dwindling Demand
Oil Prices Soar After EIA Reports Large Crude Draw

Oil Prices Soar After EIA Reports Large Crude Draw

Oil prices jumped, with Brent…

Russian Oil Output Falls 16% In July

Russian Oil Output Falls 16% In July

Russian oil companies pumped 16…

Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

More Info

Premium Content

Refiners Stand To Lose From Trump’s Border Tax Plan

Donald Trump’s first week in office as U.S. president has brought major upheaval. And it looks like the new leader could be about to cause some massive shifts in the oil market.

That’s because of a proposed tax on U.S. imports — with big implications for crude flows coming into America.

President Trump and the Republican U.S. Congress have been discussing a potential new tax on all imports. Which has been quoted at 20% — a substantial burden on shipments entering America.

That includes crude oil. A commodity where U.S. refiners still import some 10 million barrels daily.

Such a move would raise the cost for imported oil significantly. And push U.S. refiners to favor domestic crude supplies.

There’s been some doubt over the last several weeks about whether Trump would follow through with the import tax. But last Thursday new White House chief of staff Reince Priebus said at a press conference that the government is still strongly considering the measure.

That means a big shift could be coming for oil flows in America. And here’s what that means for crude buyers, and for investors.

The new import tax would be a negative for refiners. Which would be unable to shift away from imported crude oil immediately — and would see input costs for their operations rise almost overnight.

Refiners would almost certainly start looking to increase domestic oil usage. Which would boost prices for U.S. products like West Texas Intermediate relative to global blends like Brent — due both to actual demand as well as speculative buying from investors jumping on the trend. Related: Why A Trade War Won’t Derail U.S. Energy Exports To Mexico

That would in turn be good for U.S. oil drillers. Who would suddenly benefit from world-leading pricing.

One big question is: how much domestic crude can U.S. refiners take? Many facilities on the Gulf Coast are configured to use heavy crude (formerly coming from suppliers like Venezuela), while a good portion of new U.S. shale oil supplies consist of lighter crude that might not fit refinery specs.

That could push refiners to seek increased heavy oil supplies from local producers — benefitting heavy oil plays in the western U.S. and even Alaska. Watch for more news over the coming weeks on whether the import tax will pass, and for an ensuing jump in American crude prices.

Here’s to crisis and opportunity.

By Dave Forest

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment
  • Synapsid on January 30 2017 said:
    Dave Forest,

    Canada is the major supplier of our imported oil, and the tax, in its current wording, would not apply to Canada. It applies to imports from countries with which the US has a trade deficit. Canada doesn't qualify.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News