TPT May 2018

G LOBA L MARKE T P L AC E

Mr DiChristopher observed, “As output booms, the industry is developing new pipelines to bring oil and gas to market, export terminals to ship liquefied natural gas (LNG) overseas, and petrochemical plants to take advantage of cheap petroleum byproducts.” › He also took note of the “double whammy” Mr Trump’s tariffs on steel and aluminium would deliver to the growing US solar power industry, which earlier this year lost a battle to prevent the president from imposing tariffs on some solar products. Automot i ve A Dieselgate-shaded German high court decision jolts ‘the birthplace of the modern automobile’ In a 27 February ruling with implications for up to 12 million vehicles and their drivers, the highest federal administrative court in Germany declared that the country’s cities have the right to ban diesel cars in city centres to improve air quality. The blow to Europe’s largest car market followed upon appeals by German states against bans imposed by local courts in Düsseldorf and Stuttgart – the home of prestige carmakers Porsche and Mercedes-Benz. As noted by Euronews , there has been a global backlash against diesel-engine cars since 2015, when Volkswagen admitted to cheating on US tests designed to measure particulate matter and nitrogen oxide (NO X ) in automobile exhaust. These emissions are known to cause respiratory ailments and were a focus of the environmentalists whose legal activism at the local level culminated in the high court ruling. (“Major cities in Germany Can Ban Heavily-Polluting Diesel Cars, a Top German Court Rules,” 27 February) Other nations (among them Britain, France, Norway, India and China) are known to be mulling restrictions on diesel cars. But Chris Harris of Euronews observed that a ban “in the birthplace of the modern automobile” is not only a blow to the German car industry, it also is an embarrassment for the government of Chancellor Angela Merkel. Mr Harris wrote that Berlin, which has come under fire for its close ties to the car industry, had lobbied against a ban, “fearing it could anger millions of drivers and disrupt traffic in cities, with public transport not in a position to take up the slack.” › The Financial Times , which ran the story under the leader “German Ruling Is Another Nail in Diesel’s Coffin,” quoted Barbara Hendricks, Germany’s environment minister, as saying in response to the ruling, “My goal was, and still is, to ensure that there won’t be any driving bans.”

“in which China and other nations are willing to use national security as grounds for tariffs, hurting the ability of the World Trade Organization (WTO) to arbitrate disputes.” Oi l and gas From the US petroleum industry, warnings that steel tariffs would raise its costs, not least for pipelines “We are urging the administration to avoid killing US jobs through a steel tariff that impacts pipelines,” CEO Andy Black of the Association of Oil Pipe Lines (AOPL) said in a 1 March statement. According to the business channel CNBC , this reflects the consensus of oil and gas industry groups that Mr Trump’s projected 25 per cent tariff on steel, instead of “unleashing” US energy production, would in fact effectively sabotage his ambitions. (“Steel Tariffs Won’t Help Trump Achieve His Goal of ‘American Energy Dominance,’ Oil Industry Warns,” 2 March) According to the American Petroleum Institute (API), the domestic oil and natural gas industry relies heavily for many of its projects on foreign speciality steel that most US steelmakers do not supply. The pipeline sector illustrates that reliance. As reported by CNBC ’s Tom DiChristopher, industry groups told the Commerce Department last year that only about half of the roughly four dozen mills that make line pipe for US projects around the world are located in the US. At the time, the agency was preparing a plan to require pipeline makers to use only American-made steel and pipe in US projects (a campaign the Trump administration would seem to have dropped). “When it comes to making pipes of increasing size and more stringent specifications, the number of American providers shrinks quickly,” wrote Mr DiChristopher. Only eight factories make pipes 30" in diameter or larger, and just three churn out pipes that meet certain thickness standards. No American companies make pipes of the highest grade, size and thickness. Raising line pipe costs by the 25 per cent directed by the steel tariff would add $76mn to the typical pipeline project, Mr Black’s AOPL said in a 2017 report. It would tack some $300mn onto bigger projects like the Keystone XL, the Canada-to-US mega-pipeline that won Mr Trump’s approval after years of resistance by the Obama administration. › CNBC took note of the bad timing of the steel tariff for the pipeline sector, when US oil and natural gas production has surged to all-time highs, driven by advanced technology that allows drillers to free hydrocarbons from shale rock formations.

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MAY 2018