Bloomberg Intelligence: US border tax could boost gasoline prices average $0.30/gallon
31 January 2017
If the proposed broad 20% border-adjustment tax were implemented and applied to the energy sector, the result would likely lead to a large increase in gasoline prices and a big premium in domestic oil prices vs. international, according to new analysis by Bloomberg Intelligence. Pump prices could rise an average $0.30 per gallon, with more sticker shock on the East Coast, which needs to import octane components as well as crude.
The WTI-Brent spread, which has been negative since the shale boom, would quickly shift to a premium of more than $10 a barrel.
PBF Energy and Phillips 66, the US refiners importing the most foreign crude, would have significant exposure to the border tax, Bloomberg Intelligence said. PBF, due to its East and West Coast refineries, is the least able to switch to more domestic crude oil compared with peers. The company also currently exports less fuel than peers, which further adds to its margin risks.
Refineries on the Gulf Coast may be more able to switch their crude slate to process more domestic crude, though margins would suffer.
The top-five US refiners dominate imports, bringing in almost 2 million barrels a day. The growth in Canadian oil production this year is likely to lead to another increase in imports from the country in 2017, the analysts said. The US imports about 3.8 million barrels a day of oil from Canada—more than from any other country. Mexico is the fourth-largest supplier of US oil imports.
Sounds like a carbon tax? In my view that will help make America Great. Not good for foreign oil suppliers. Sad.
I think the figure of 3.8 million may be incorrect. Need to check.
Link does not lead to report. Just bloomberg intelligence portal so need to search for more details.
Posted by: Calgarygary | 31 January 2017 at 08:50 AM
Nothing new here. This sounds like a concerted (opposition) effort to exaggerate the effects of a manufactured products/goods border tax, on local gasoline price. Almost CCN style?
As more and more fossil and bio fuel (gas and oil) is produced in USA/Canada, cost of reduced imported fuels will be offset with equivalent export of finish products.
OTOH, improved economic recovery/growth will increase local consumption and price of both gas and liquid fuels, regardless of border taxes.
Posted by: HarveyD | 31 January 2017 at 11:15 AM
3.8 mbpd is fairly close. Surprised.
Posted by: Calgarygary | 31 January 2017 at 03:24 PM
Tariffs start trade wars then everyone loses, Rump should know that.
Posted by: SJC | 31 January 2017 at 09:27 PM
Selective 'border tax' or 'import duties' are and have been used to protect the national interests. Another effective method is the value of your $$$. (China and many other countries) are using the latter to make their goods cheaper and promote exports.
The ideal would be one global International currency and the same/equivalent international border tax. The quality of goods and services imported should be checked to ensure proper safety and protection.
However, that would not stop countries to starve their workers, create hugh pollution and local health problems etc.
Globalization at all cost is not and was not the solution. UN and EU are falling apart and will have to be updated to survive.
Posted by: HarveyD | 03 February 2017 at 03:34 PM