• 3 minutes Nucelar Deal Is Dead? Iran Distances Itself Further From ND, Alarming Russia And France
  • 5 minutes Don Jr. Tweets name Ukraine Whistleblower, Eric Ciaramella. Worked for CIA during Obama Administration, Hold over to Trump National Security Counsel under Gen McCallister, more . . . .
  • 9 minutes Shale pioneer Chesepeak will file bankruptcy soon. FINALLY ! The consolidation begins
  • 12 minutes China's Blueprint For Global Power
  • 20 mins EU has already lost the Trump vs. EU Trade War
  • 8 hours Impeachment S**te
  • 2 days Science: Only correct if it fits the popular narrative
  • 15 hours 55.00 WTI
  • 2 hours More dumbed down? re Hong Kong Act of Congress
  • 2 hours Article: Did Exxon only make $39 Million onshore U.S. last quarter ?
  • 2 days IEA predicts oil demand will grow annually at 1 million barrels a day for the next 5 years
  • 2 days Crazy Stories From Round The World
  • 55 mins U.S. Shale To Break Records Despite Bearish Rhetoric
  • 23 hours Everything You Need To Know About Trump
  • 15 hours Visualizing Pennsylvania Oil & Gas Production (Through September 2019)
  • 13 mins Pope Proposes New Sin: Thou Shalt Not Destroy The Harmony Of The Environment
  • 17 hours Water, Trump, and Israel’s National Security
  • 2 days ‘If it saves a life’: Power cut to 1.5 million Californians
  • 2 days Pioneer's Sheffield in Doghouse. Oil upset his bragging about Shale hurt prices. Now on campaign to lower expectations, prop up price.
Alt Text

Chinese Oil Imports Soar To Record High

China’s crude oil imports reached…

Alt Text

The No.1 Oil Hotspot For 2020

While the Middle East gets…

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
Download on the App Store Get it on Google Play