Impeachment and the cost to the Oil Industry

Make no mistake, the oil industry will be affected by the President Trump’s pending impeachment. Even though energy policy is a bipartisan issue, it can not escape damage.

First, we can rule out any quick ratification of USMCA, the new NAFTA agreement. We estimate 20% chance to pass by end of 2019, Predictit.com gives a 28% chance to pass by end of year. https://www.predictit.org/markets/detail/4916/Will-Congress-ratify-the-USMCA-by-year-end-2019

Lobbying groups are pushing Washington to not let impeachment inquiry stall this legislation. From a game theory standpoint, both parties have reason to pass it. However, the impeachment inquiry is taking up most of the legislative attention and little else is likely to get done.

A holdup of USMCA will cost the oil industry, as it contains legal provisions for protecting oil and gas firms operating in Mexico, would lower tariffs on chemicals used to maintain pipelines, and keep oil products tariff-free.

Second, the cost of steel for the oil industry. The administration is heavily distracted from resolving the trade war with China. Impeachment is taking all the air out of the oval office. So long as a tariff remains on steel, the oilfield will feel that extra tariff in their wallet as everything with oil touches steel, from pumping rods to pipelines. In our estimate, a trade deal with China will happen before the election to aid Trump in his re-election campaign. Especially, if he is impeached, which we estimate at 90% chance by March 31, 2020, with Predictit estimating it at 81%. https://www.predictit.org/markets/detail/3537/Will-Donald-Trump-be-impeached-in-his-first-term

Impeachment and the cost to the Oil Industry

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