Trump orders U.S. steel be used for oil and gas pipelines, while Pa. project sits on foreign-made supply
On January 24th, 2017, President Donald Trump signed his name with potentially significant implications for the oil and gas industry and its opponents. President Trump signed to expedite the construction of the contested pipeline projects (known as the Keystone XL and Dakota Access) while, also, requiring American-made steel be used in future pipeline and infrastructure projects as well. However, questions arise about the U.S. steel industry’s ability to produce the sheer volume of pipe needed for some of the larger projects in the works. What does the directive mean for those pipeline projects, including at least one in Pennsylvania, with massive stockpiles of foreign-made steel already amassed? The pipeline projects cost $2.6 billion, and that’s just in steel. Christopher Stockton, a spokesperson for the pipeline builder, Tulsa-based Williams Partners, said that within the timeframe to finish the pipeline and the high demand for steel pipe, that there wasn’t available mill space to process the order.
Steel-making is an expensive endeavor with high fixed costs. Steelmakers can be very prone to quickly turning from huge profits to wide losses when demand turns. A heavy approach at foreign trade could actually harm domestic manufacturing if it weakens across to foreign markets. It could lead to higher prices on many items, reducing domestic consumption because of inflation, and harming manufacturers that count on volume to drive efficiency and keep costs low.
Pipelines aren’t known to be stable and good for the environment. In 2016, Oklahoma’s 30-inch diameter pipeline carrying crude oil from the critical Cushing, Oklahoma hub to refineries and chemical plants on the Gulf Coast began to leak and was shut down overnight; the second release connected with Cushing storage. In Pennsylvania, of 2016, 55,000 gallons of gasoline gushed from a ruptured Sunoco Logistics pipeline; the 80-year old pipeline was damaged by a heavy storm that dumped seven inches of rain on the area. In Alabama, the Colonial Pipeline leaked an estimated 336,000 gallons of gasoline. That spill, of 2016, was Colonial’s fifth in the state and occurred on a 43-year old section of the pipeline. Environmental hazards of an aging pipeline infrastructure carrying fossil fuels worry many and these leaks, since 2006, have amounted to a cost of $4.7 billion and more.