In yesterday’s story (March 24), we talked about how a survey of our U.S. E&P readership found that a majority of respondents “favor the U.S. federal government installing a tariff, duty or import fee (tax) on all imported oil coming into the country.”
We also discussed how, when it comes to which form of import levy, 35% of respondents favor an import fee tied to a floor price while another 10% prefer a set figure of $10, $15 or $20/bbl. About 22% were unsure. Roughly the remaining third have not favored an import fee from the start.
Will an import fee improve the U.S. industry? On survey question 5, we asked respondents, “Do you think that some form of import fee would stabilize, and perhaps increase, U.S. domestic drilling?” In the total group of operators, equipment/service firms, drilling/workover contractors, engineering firms and consultants, the answers were: Yes, 48.4%; No, 30.8%; Unsure, 20.8%.
Among just operators, the results were: Yes, 48.0%; No, 33.3%; Unsure, 18.7%.
Accordingly, a near-majority said that they believe an import fee would be helpful to the U.S. market.
Less optimism on a personal basis. The above results having been expressed, there was some contradiction from respondents when we asked them if an import fee would prompt their company, or their customers, to expand activity. We asked them, “If an import fee became law, do you think that your company or operator customer would increase its U.S. domestic drilling?” The results showed more uncertainty in the total group, when the question became more personalized: Yes, 33.3%; No, 31.1%; Unsure, 35.6%.
Among just operators, the results were similar: Yes, 31.6%; No, 34.5%; Unsure, 33.9%.
So, in summation, while a near majority of U.S. professionals believes that an import fee could stabilize and perhaps improve domestic drilling as a whole, there is less certainty when the question is applied to their own individual companies and/or customers. Some of this may be due to great uncertainty being caused by operators continuing to revise and slash capital budgets, plus the lack of any certainty as to when the U.S. economy will begin to recover from the Coronavirus.
WorId Oil will release remaining results from this survey on its website tomorrow, March 26, which will cover potential responsiveness and attitudes of the Trump Administration and Congress on an import fee.