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Image 1 of 4Pipelines lead to a ship being loaded at Kinder Morgan Energy Partners terminal in Pasadena, which will be expanded as part of a $240 million project the company announced Oct. 14, 2014. The expansion includes 2.1 million barrels of storage between Kinder Morgan s Pasadena and Galena Park terminals, and an additional dock for ocean-going vessesls at the Galena Park facility. (Kinder Morgan photo) lessPipelines lead to a ship being loaded at Kinder Morgan Energy Partners terminal in Pasadena, which will be expanded as part of a $240 million project the company announced Oct. 14, 2014. The expansion includes ... morePhoto: Kinder Morgan / Kinder MorganImage 2 of 4JSW Steel grinder Juan Silva smooths out part of a steel pipe Thursday, September 1, 2016 in Baytown. ( Michael Ciaglo / Houston Chronicle )JSW Steel grinder Juan Silva smooths out part of a steel pipe Thursday, September 1, 2016 in Baytown. ( Michael Ciaglo / Houston Chronicle )Photo: Michael Ciaglo, Staff / Houston ChronicleImage 3 of 4Bales of raw steel imports sit in an outdoor storage yard at the Insteel Industries factory in Houston, March 2, 2018. President Donald Trump is expected to formally sign off on stiff and sweeping tariffs on steel and aluminum imports at noon on March 8, according to people familiar with the deliberations. (Todd Spoth/The New York Times) lessBales of raw steel imports sit in an outdoor storage yard at the Insteel Industries factory in Houston, March 2, 2018. President Donald Trump is expected to formally sign off on stiff and sweeping tariffs on ... morePhoto: TODD SPOTH, STR / NYTImage 4 of 4Raw steel wiring is measured after being stripped and resized at the Insteel Industries factory in Houston, March 2, 2018. President Donald Trump is expected to formally sign off on stiff and sweeping tariffs on steel and aluminum imports at noon on March 8, according to people familiar with the deliberations. (Todd Spoth/The New York Times) lessRaw steel wiring is measured after being stripped and resized at the Insteel Industries factory in Houston, March 2, 2018. President Donald Trump is expected to formally sign off on stiff and sweeping tariffs ... morePhoto: TODD SPOTH, STR / NYTTrump's tariffs will cost Texas oil and gas jobs1 / 4Back to GalleryTariffs on steel and aluminum will have a heavy impact on employment in Texas, where the number of jobs in the energy industry — which relies on foreign steel and aluminum for rigs, pipelines and other equipment— are nearly double the number of aluminum and steel jobs nationwide.
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The U.S. can expect to lose between one and 1.5 oil and gas jobs for every single steel or aluminum job saved by the tariffs, said Karr Ingham, an economist who studies the Texas oil industry. Texas has 225,000 jobs in oil and gas exploration, production and services, far more than the 140,000 jobs nationally in steel and aluminum that the tariffs are meant to bolster, Ingham said.
And that’s not counting the Texas employees who work for refining, pipeline or petrochemical companies, he added.
“There’s nothing about these tariffs that can be considered positive for the oil and gas industry,” Ingham said. “The imposition of these tariffs will result in net job loss, not just in oil and gas, but in other manufacturing sectors like construction and transportation that use steel.”
On Friday, President Donald Trump imposed steep tariffs on imports of foreign steel and aluminum designed to boost American companies. Trump’s order will impose tariffs of 25 percent on steel and 10 percent on aluminum imports, but will exempt Canada and Mexico and leave negotiating room for U.S. allies to avoid or lower the tariffs.
The tariffs go into effect in 15 days.
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The squishy nature of the order, though, is no less concerning for the American energy industry and likely to spark an international trade war, said Ethan Bellamy, an energy analyst at Robert W. Baird & Co.
“I think the technical term an economist would use for this tariff is boneheaded. This is Econ 101, not quantum physics,” he said. “You can’t cast a stone into a lake and expect it to stop at the first ripple. This action will reverberate across the economic and political landscape.”
The ripples will hit Texas’ independent oil and gas producers, which on average put 10 percent of total costs into steel-related expense, according to Ingham. Refining and petrochemical companies will also feel the effects.
“Implementing tariffs on specialty steel and aluminum, which many U.S. steelmakers do not supply in the quantities and timelines needed for projects, could harm America’s energy renaissance and jobs,” said Jack Gerard, president of the American Petroleum Institute, the oil industry trade group. “Steel and aluminum are central to nearly every part of the U.S. energy value chain, from on- and offshore development, to pipelines, refineries and the local manufacturing facilities that support them."
OVERSEAS: As Trump imposes tariffs, allies sign free-trade deal - with US absent
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Manufacturing and steel workers unions, meanwhile, called Trump’s tariffs a common-sense mechanism for trade enforcement and protecting American jobs.
“Wall Street’s hair is on fire over these tariffs because wealthy investors enrich themselves by closing mills and factories in the United States and moving them overseas,” said Richard Trumka, the president of AFL-CIO, which has thousands of members in the Houston area. "There’s been a war on working people for decades, and we have been getting our butts kicked.”
The Texas oil and gas industry, meanwhile, is drilling wells lined for miles with foreign steel.
“It really is a worldwide web of steel from countries that’s going in the wellbore,” said John Tintera, president of the Texas Alliance of Energy Producers. “The wells being drilled now in Texas are a mile deep and 2 miles long. That’s enough steel to put up a fairly decent sized building for each well that’s drilled.”
ryan.handy@chron.com
jordan.blum@chron.com
L.M. Sixel contributed.
