HOUSTON — Plains All American Pipeline (PAA) has $1.5 billion in projects that use a lot of steel, including 26-inch pipes that can only be imported, CEO Greg Armstrong said Monday, as industries weigh the impact of the Trump administration's planned steel and aluminum tariffs.
Only three places in the world make that kind of steel pipe, and none of them is the U.S., he said at the CERAWeek 2018 energy conference.
While it's still "very early" to see how much the tariffs would hurt, Armstrong said "it's a thornier issue than I think is printed in the headlines." But he added that Plains All American also buys valves that aren't made in the U.S.
Having enough pipelines isn't just important to pipeline operators. Oil producers rely on them to get the products to customers, who are increasingly overseas since the federal government lifted the ban on U.S. exports of domestic crude.
Armstrong noted that a lot of the oil from the prolific Permian Basin will be exported to international customers.
"I don't think it would be appropriate to put a tariff on something you can't get in the U.S.," he said. "If you can't get what you need, you've got to go somewhere else."
Pipeline companies are also especially dependent on imports. An ICT International study conducted for the pipeline industry found that 77% of the steel used in pipelines in recent years was imported, according to Bloomberg.
Shares of Plains All American closed up 2.9% at 21.94 on the stock market today, retaking their 50-day average, amid reports that Republicans in Congress have come out in opposition to the tariffs. Among other pipeline giants, Kinder Morgan (KMI) edged up 0.7%, Oneok (OKE) dipped 0.3%, Enterprise Products Partners (EPD) finished virtually unchanged, and Energy Transfer Partners (ETP) rose 1.5%.
The news is quoted from Investor's Business Daily.