Plains CEO sees peril for pipelines in tariffs
Executive says his sector is a big user of steel and will need ‘some flexibility to move forward’ even as he praises Trump on regulatory relief
PLAINS All American Pipeline CEO Greg Armstrong said Monday that steel tariffs announced by President Donald Trump last week could hurt pipeline construction in the United States.
Speaking at the CERAWeek by IHS Markit conference in Houston, Armstrong said certain types and sizes of steel pipe, as well as valves and other equipment, were only available outside the U.S.
"We need some flexibility to be able to move forward. That will be part of the dialogue" with the administration, he said. "We got about $1.5 billion of projects underway that use quite a bit of steel."
Trump said Thursday that he planned to impose tariffs of up to 25 percent on foreign steel and 10 percent on aluminum, a move that raised concerns of higher costs among energy companies, which use thousands of tons of steel in drilling, refining and pipeline operations. The steel tariffs also could complicate the so-called second wave of chemical plant construction expected in coming years across east Houston and the Gulf Coast, after some $60 billion in local petrochemical projects wind down, industry officials and analysts said.
Trump can impose the tariffs without approval from Congress after the Commerce Department established in a recent study that steel imports are a threat to national security because they are “weakening our national economy.”
But Jack Gerard, president of the American Petroleum Institute, a trade group, criticized the proposed tariffs as “inconsistent with the administration’s goal of continuing the energy renaissance and building world-class infrastructure.”
Armstrong’s comments came during a discussion on the state of U.S. energy infrastructure and the Trump administration's bid to ramp up construction of pipelines in the years ahead. Despite his criticisms of the steel tariffs, Armstrong praised the administration’s efforts to accelerate projects, saying the permitting and regulatory processes have been streamlined since Trump took office.
“The number of regulations we have to comply with have stacked up over the years,” he said. “The last 12 to 14 months we've seen a different attitude, and attitude matters a lot.”
Those comments were echoed by Sen. Dan Sullivan, R-Alaska, who is sponsoring legislation to limit government agencies'
permitting reviews to less than two years.
“There's a lot of chaos in Washington,” he said. “But if you get behind the daily headlines and tweets, it's clear there has never been a more exciting time for the American energy sector.”
But one of Trump's signature accomplishments — the tax cut signed last year — has yet to have significant effects on the energy sector, Armstrong said.
“Right now it hasn't had a huge impact on what people plan to do,” he said of the tax cut. “It's a little bit early.”